December 31, 2010

Along with the staggering theft in broad daylight of Americans' assets that has occurred in the course of the ongoing financial crisis, as taxpayers funded multi-trillion bank bailouts and banks stole homes through foreclosures with the help of fraudulent paperwork, American companies have also been picking the pockets of workers more directly.

This second round of paycheck theft has come in the form of stolen productivity gains.

Historically, the relatively high and rising standard of living of American workers--both blue and white-collar--which once gave the US one of the highest standards of living in the world, has come courtesy of rising productivity, which has allowed US companies to produce more goods with less labor, and to then pass some of the enhanced profits on to workers in the form of higher wages, without having to raise prices. That has been important because, when higher wages are financed by higher prices, it tends to be a kind of zero-sum game: higher wages cancelled out by inflation.

But beginning in 2000, the old system already creaky, broke down. (It must be noted that this system was never the result of the capitalists' largesse, but rather was because of a tighter labor market and, critically, a powerful labor movement.)

The corporate onslaught against trade unions and against the minimum wage, which began with the Nixon administration in 1968, combined with so-called "free-trade" deals that allowed US companies to shift production overseas and then to freely import the products of their overseas production facilities back for sale to Americans at home, by weakening the power of workers to demand higher wages, has led to a situation where companies can just pocket all the profits from productivity gains, leaving wages stagnant, or even driving them down.

The recession that began in late 2007 has only made matters worse, giving owners and managers to opportunity to really hammer employees. With real unemployment and underemployment now running at close to 20%, employees are in no position to press for higher wages, even as those who are still working are putting in extra effort to keep their jobs, thus pushing productivity gains even higher.

The figures speak for themselves.

According to the Bureau of Labor Statistics, productivity gains during the 1990-1999 decade averaged just 2.1% per year. The prior decade, from 1980-1989, the average productivity gain was 1.5% per year. But between 2000 and 2009, when the economy suffered two recessions, the average annual productivity gain has been 2.9%, almost 50% higher than the prior decade, and almost double the rate in the 1980s.

During this same period, however, wages have actually declined. According to the BLS, wages in 2010 rose 0.1%, but inflation, running at an official (and grossly under-measured) 1%, more than ate that up. According to the Economic Policy Institute, a Washington think tank, for the whole decade from 2000 through 2009, wages actually sank for most people. In 2000, the median weekly wage for a high school graduate was $629. By the end of 2009, high school graduates were earning a median weekly wage, in inflation-adjusted dollars, of just $626--three dollars a week less than a decade earlier. A college degree didn't change things, either. In 2000, the median weekly wage for a college grad was $1030, but that had fallen to $1025 by the end of 2009.

Remember, all during that decade, companies were seeing productivity gains averaging almost 3% per year. If 50% of that gain in productivity annually had gone to workers, as might have been typical back 30 years ago when unions were stronger and before Congress gave away the store by signing onto the World Trade Organization and the North American Free Trade Act and similar trade agreements, that high school grad would have been earning $729 a week in inflation-adjusted dollars by 2009, while the college grad would have been earning $1,195.

Of course as a whole, Americans have been doing even worse, because these are just the mean wages of people who are working full weeks. In fact, many companies have been laying off workers, and making the remaining workers, desperate to hang on to their jobs, work harder to produce the same amount of product, meaning that besides not getting any pay increase, they are producing much more profit for the boss. Many workers who are still hanging onto their jobs are actually working fewer hours, and thus are taking home smaller paychecks, all of which goes into that higher productivity figure for output per worker the government is reporting.

Indeed, the Wall Street Journal recently reported glowingly that US production of goods and services had returned to its 2007 pre-recession level, but this is with unemployment running at an official rate of 9.8 percent, and an actual rate of about 19 percent.

What we're witnessing is a massive national "speed-up" which is enriching the owners of capital, while the workers are getting stiffed. It is the payoff to the ruling class for decades of hammering of trade unions, and also of trade unions cutting deals with the Democratic Party, which in turn has refused to defend workers' interests. Look at the sell-out of Labor during the first two years of the Obama administration. The union movement's one big issue--restoring some measure of fairness to the Labor Relations Act, so that it would be at least possible to organize unions and to win contracts and improved wages and working conditions--was dropped without even a fight by the Obama administration and the leadership of the House and Senate. The government, fully in the hands of Democrats, has also continued to sign trade agreements, most recently with Korea, that further shift jobs overseas, thus further weakening the position of workers here at home.

A cynic might speculate that this is also why the Democrats have refused for over three years now to come up with any real public jobs program despite the desperate straits of tens of millions of jobless people who have been without work for more than a year. The Democrats, in thrall to corporate interests, would on the evidence much rather spend $50 billion on a program of extended unemployment benefits that leaves those millions of people hungry for any real job, than spend that same sum on providing them with government jobs, as that would actually reduce unemployment and increase the bargaining power of all workers vis-a-vis employers.

Meanwhile, the national corporate media, itself viciously anti-union, continue to skew news coverage to portray unions as corrupt and greedy, so that the 90 percent of American workers who are not in a union don't even realize that any pay gains or benefits they get are because employers are trying to avoid unionization of their workforce.

Unless Americans wake up soon to how this process is impoverishing us all, we will see this shifting income and wealth to the top strata of the population continue until most of us are little more than modern-day serfs.

A start would be for people to at least recognize that this stagnation and decline in incomes we're witnessing is not some natural phenomenon. It is, no less than the fat salaries, perks and bonuses paid by corporate managers to themselves, simply another manifestation of corporate greed gone wild.

President Barack Obama is receiving congratulations for moving to the center on the tax agreement with Republicans last week.

Both sides think they got something: Democrats feel this will nudge unemployment below 8.5 percent in 2012, helping the president get re-elected; Republicans achieved long-standing goals on measures such as the estate tax and think they will get most of the credit for an economic recovery that’s already under way.

The truth is, the deal moved us closer to a fiscal crisis, just as the euro zone now is experiencing.

Who will emerge on top in the U.S. version is harder to predict; at the moment, Republicans have the edge. But it’s not clear even they will be happy with what they wished for -- an opportunity to enact massive federal government spending cuts.

The central conceit behind official thinking about fiscal policy on both sides of the aisle is that investors will buy almost all U.S. government debt without blinking an eye or increasing Treasury yields. This is an endearing and heart-warming notion, rather like a seasonal showing of Jimmy Stewart in “It’s a Wonderful Life.”

What it should do is force us to think about how much the world has changed and how antiquated such ideas are today.

The United States is steadily losing its global economic and financial predominance. To be sure, we offer the largest amount of government debt on the market, but investors have plenty of choices around the world, both in terms of debt and other assets. The idea that our Treasury market will be buoyed by captive investors, whether the Chinese central bank or anyone else, is quaint and at odds with today’s reality.

Remember that we run a large current account deficit, so we need to take in new foreign capital every day just to maintain our lifestyle. So this isn’t just about foreigners refusing to understand the American debt dream.

It’s true that the euro zone has had a rocky ride in recent months and we shouldn’t expect those countries to sort out their problems soon. Another round of serious euro sovereign debt issues is likely as we head into the spring.

But the euro leadership will sort itself out; there is too much on the line. A stronger and more Germanic core of the euro zone will establish its fiscal credibility and its resilience.

The key to debt sustainability isn’t how much revenue the government can raise relative to gross domestic product or some other economic characteristic. It’s whether a country has the political will to raise taxes or cut spending when under pressure from the financial markets.

This is where Greece and Ireland were found wanting in 2010; we’ll see how Portugal, Spain, Italy, Belgium and perhaps even France do in 2011. Then it will be the turn of the United States.

The issue isn’t whether we can muster a bipartisan consensus to cut taxes; this is easy to do. But can our politicians agree on what to do when 10-year Treasury yields surge, interest payments soar and there are concerns about the rollover of our relatively short-term government debt?

One response is: The Federal Reserve won’t let this happen and will use another round of quantitative easing or some other innovation to hold down long rates. Maybe so, but 10-year benchmark rates have spiked in the past month or so, and mortgage rates -- presumed to be the Fed’s target -- have gained more than half a percentage point from recent lows.

At this point, we will have only two choices: Raise taxes or cut spending. Given that the Obama administration is unprepared for this scenario, and has no sensible tax reform plans under way, this gives an opportunity to Republicans intent on big spending cuts. For anyone hoping to “starve the beast,” this will be a historic opportunity.

But there’s a problem. The U.S. government doesn’t take in much tax revenue -- at least 10 percentage points of GDP less than comparable developed economies -- and it also doesn’t spend much except on the military, Social Security and Medicare. Other parts of government spending can be frozen or even slashed, but it just won’t make that much difference.

That means older Americans are going to get squeezed, while our ability to defend ourselves goes into decline. Just because there’s a bipartisan consensus on an idea, such as tax cuts, doesn’t mean it makes sense. Today’s tax cutters have set us up for tomorrow’s fiscal crisis and real damage to U.S. national security.

Despite the end-of-the-year upturn with Congressional ratification of the START Treaty and repeal of "Don't Ask, Don't Tell," the United States remains stuck in a quagmire that has paralyzed our politics for 30 years. While the Republican party holds our government hostage, Democrats typically collaborate in public policies that don't have a prayer of resolving the deeply serious problem we face.

Though Americans younger than about 40 have never experienced it, there was a time when government was seen as a vehicle the American people could use to resolve pressing societal problems. When government failed to address the needs of relatively powerless groups, it was possible for them to mobilize around their grievances and place them on the public's agenda.

No longer. Today, protest has become routinized and all-but-impotent. Or, like the Tea Party, it has been coopted by the agenda of wealthy conservatives.

The dominant political message beamed at younger Americans for the past 30 years is that government is the problem, the market is the solution, and the United States must rely on aggressive military intervention to defend "our" interests.

And so, when the Democrats pledge to end the tax cuts enjoyed by the wealthiest Americans, the Republicans cry "class warfare," and the Democrats cave. With former Senator Alan Simpson gleefully anticipating the budgetary "blood bath" this coming spring when Congress has to raise the ceiling on national debt, we'll see more of the same. Social Security looms as perhaps the likely next target.

If we are to escape this quagmire, it is important to understand how we got into this mess and why we have lost the sense that we as a people can solve our problems and determine our future.

The crucial turning point occurred with the election of Ronald Reagan in 1980. Reagan's policies were anticipated in earlier pronouncements by then corporate attorney Lewis Powell and the Trilateral Commission who blamed America's economic woes of the 1970s on the "democratic excess" of the 1960s -most notably the entry of new populations -racial minorities, women, and the young- into an increasingly agitated political process. Both Powell in 1971 and the Trilateralists in 1975 called for a concerted effort to shift American public opinion to the Right, while turning politics over to the market.

Reagan's electoral success stemmed from his ability to appeal through folksy rhetoric to voting majorities while simultaneously producing the market friendly policies corporate America desired. Thus he appealed to time-honored "family values" that allegedly prevailed in a simpler, if mythical, United States before the era of "riots, assassinations, and domestic strife over the Vietnam war," as he characterized the 1960s.

By tapping into the very real grievances of Americans who felt they were losing ground in the 1970s, Reagan created the key to the Right's electoral success ever since: a pseudo-populism that blamed the "strife" of the 1960s on an allegedly liberal elite: liberal Big Government, liberal university administrators, and the "liberal" media who paid attention to the strife. Pseudo populism drew crucial populations who felt aggrieved by 60s era movements -notably the white South and the white working class-away from the Democratic Party. The Democrats' response was telling: a new Democratic Leadership Council was organized to move the party into the corporate-friendly center.

The political backlash against the 60s was greatly aided by the commercial media -by a narrowed range of political discourse produced by an increasingly subservient news media, and by a wide range of films (think Big Chill or Forrest Gump), television sit-coms (Reagan's favorite: Family Ties), and advertisements that either reinforced the 60s imagery played up in the conservative backlash or converted 60s social movements to stereotypes that robbed them of their political meanings relevant to today.

It would take pages to explain adequately, but I argue that during the 1960s era the very same forces -a narrow range of media interpretation and the commercial emphasis on dramatic imagery, conflict and personalities- provided an open invitation to the kinds of "strife" backlash types love to equate with something they call the "Sixties." The mass media did not consider the more system-challenging meanings and arguments of 60s-era social movements worthy of serious consideration. But they were attracted to the behavioral expressions of what they too glibly saw as a generation in revolt.

These are the same images, behaviors, and personalities -and generational frame for understanding them- that continue to provoke unending media treatments and "hip" sales pitches designed to encourage our consumption of material goods and entertainment. We are stuck with a discourse that loves to use media images to blame some "Other" for our problems.As for the now-distant 1960s era, it has been relegated to an alleged "generational debate" between those who continue to blame the 60s for our contemporary problems and those who are, perhaps, wistfully nostalgic for a more vital and hopeful time. What we have lost as a people is, first, a history whose central meaning was that even relatively powerless people can organize and achieve historic change, and second, the ability to carry on a democratic conversation with each other across the boundaries that have long been rigidified in what passes for political discourse in our mass media.

Left to its own devices, a capitalist economy extracts enormous wealth from the labor of employees and reliable access to cheap resources. The inequality capitalism produces is supposedly balanced by the one-person-one-vote equality of a political democracy. The "people" are thus empowered to rein in the excesses of capitalism through the political process. Under the neo-liberal regime, we the people have lost that power.

Ted (Edward P.) Morgan, a political science professor at Lehigh University, is the author of the newly-published What Really Happened to the 1960s: How Mass Media Culture Failed American Democracy (University Press of Kansas).

Obama Admin Takes Aim at China’s Renewable-Energy Subsidies

Last week, in a move that pits American labor against China's green-technology industry, the Obama administration filed a complaint with the World Trade Organization over China's wind-power subsidies.

The U.S. move challenges China's rapid growth in the renewable-energy market, and also throws the weight of the administration behind the unions, elevating concern about Chinese competition to the level of official U.S. policy.

The complaint falls on the heels of a 5,800-page filing made in September by the United Steelworkers against China, arguing that its renewable-energy subsidies violate international trade regulations. According to that filing, China defied trade agreements by providing land grants and low-interest loans in order to produce clean technology at artificially low prices.

Both complaints ignore the fact that energy industries all over the world benefit from government subsidies. In the U.S. and Europe, the nuclear and fossil-fuel industries get massive public subsidies. And as a percentage of GDP, Spain and the U.K. pump funding at levels similar to China's into green subsidies.

Beijing dismisses the attacks as another example of China-bashing, which rose to new heights in the U.S. during the recent 2010 midterm elections, when no fewer than 29 congressional and gubernatorial candidates pushed anti-China messages in campaign ads. In October, The Wall Street Journal reported that "China is emerging as a bogeyman this campaign season, with candidates across the American political spectrum seizing on anxieties about the country's growing economic might to pummel each other on trade, outsourcing and the deficit."

The Obama administration appears to be taking a cue from this surge of protectionist scapegoating.

China, for its part, feels it is being presented with a damned-if-you-do-and-damned-if-you-don't set of options. If the country invests in clean technology, U.S. officials claim China is engaging in "unfair" trade practices. If it does not, U.S. lawmakers threaten to slap a high-carbon tariff on Chinese imports. It's a no-win situation.

China is actually doing the world a favor. Its renewable-energy subsidies, which have made it a leading producer of wind and solar technology, are one of the most encouraging signs of progress in the global fight against climate change. China is currently the only country producing green technology at a scale that could dramatically bring down the price of goods like solar panels and wind turbines, making them affordable for both the developed and developing world. These advances could not have been brought about without government subsidies.

China‘s leaders have also committed to ambitious carbon-reducing policies. The country is aiming to cut its greenhouse gas emissions per unit of GDP by 40 to 45 percent from 2005 levels by 2020. And it is committed to deriving at least 15 percent of its energy from renewable sources by 2020.

China is now the world's largest emitter of greenhouse gases, but it still ranks far below the U.S. in terms of per capita emissions and historical emissions. And almost one-quarter of China's emissions come from products that are made for export. To the extent the country becomes a major exporter of wind turbines, solar panels, fuel cells, and electric vehicles -- all of which are energy-intensive to produce -- it will be taking on an emissions burden from other countries.

If the U.S. wants to get serious about renewable energy, it should ramp up its own subsidies for clean technology, not quibble over China's.

Lucia Green-Weiskel is project manager of the climate change program at the Beijing-based independent Innovation Center for Energy and Transportation. She appeared on Democracy Now during the COP 15 in Copenhagen and the COP 16 in Cancun, and her work has been published in The Nation.

Tina Gerhardt is an independent journalist and academic who covers climate change and environmental politics. Her work has appeared in Alternet, Grist, The Huffington Post, In These Times, The Nation, and Salon. Most recently, she covered the COP 16 climate meeting in Cancun for Alternet and The Nation.

Those words should be displayed at New York's airports as a welcome to bedraggled travelers during the Northeast's latest "snowpocalypse." Why? Because the Big Apple's much-lamented paralysis this week is a critical cautionary tale for everyone. The episode warns us about the kind of thing that's likely coming to the rest of America as we now willfully mix three toxic problems.

The first of those is global climate change. Though no single mega-storm is the fault of climate change, scientists agree that weather – including snow patterns – will become more intense as the planet's ecosystem is transformed by human-produced pollution. So while New York's near-record snowstorm may not be the direct result of unbridled carbon emissions, powerful storms like it will undoubtedly be more frequent thanks to our head-in-the-sand attitude toward the environment.

This might be slightly less alarming if our country were making investments to mitigate climate change's worst effects. But that gets to the second problem that the New York snowstorm epitomizes: America is still being eviscerated by conservatives' anti-tax, budget-cutting religion – a religion whose high priest is New York Mayor Michael Bloomberg.

Like so many wealth-worshiping politicians across the land, Bloomberg spent the last few years focused on two priorities: He campaigned against proposals to replenish depleted public coffers via slightly higher taxes on Wall Streeters, all while citing those depleted coffers as a rationale for massive municipal layoffs. Those job cuts, which were particularly acute at New York's snow-removing sanitation department, have now predictably translated into an immobilized metropolis.

Bloomberg and other politicians who champion this pervasive tax-cut/budget-cut ideology will certainly employ rhetorical spin to distract from this cause-and-effect story. But with New York still resembling the ice planet Hoth, it's clear Mother Nature can't be spun, and even more clear that conservative economic ideology will probably deliver similar results all over America during future weather-related catastrophes.

But, then, how can such a bankrupt ideology persist in the face of such terrible consequences? Welcome to the third problem highlighted by the New York snowstorm: plutocracy.

We all know that American politics is dominated by money. The U.S. Senate is a millionaires' club, and the politicians who aren't personally rich are typically bankrolled by corporate interests. Billionaire Mayor Bloomberg personifies this plutocratic order – and his declaration that "the city is going fine" during the blizzard because "Broadway shows were full" demonstrates what plutocracy means in practice. It means that when an emergency does not hurt the Bloombergs of the world, our government does not see any emergency at all.

Yes, as long as the Bloombergs' streets are plowed (as the mayor's was), as long as the all-important rich are enjoying their theater engagements, the plutocrats think everything is A-OK. They don't care that, say, an outer-borough newborn died because EMTs couldn't get to the baby's home for nine hours. They don't care that another outer-borough woman had to wait 30 hours for an ambulance after breaking her ankle. And those plutocrats certainly aren't about to change the conservative economic policies that help make these crises so horrific for the non-rich.

Again, this triple threat of climate change, economic conservatism and plutocracy is not limited to New York. It's the new ubiquitous normal in America, which is why the Big Apple's blizzard experience is so significant.

David Sirota is a bestselling author whose newest book is "The Uprising." He is a fellow at the Campaign for America's Future and a board member of the Progressive States Network-both nonpartisan organizations. Sirota was once US Senator Bernie Sanders' spokesperson. His blog is at www.credoaction.com/sirota.

What will happen to the US economy in 2011? If you’re referring to profits of big corporations and Wall Street, next year is likely to be a good one. But if you’re referring to average American workers, far from good.

The two American economies — the Big Money economy and the Average Working Family economy — will continue to diverge. Corporate profits will continue to rise, as will the stock market. But typical wages will go nowhere, joblessness will remain high, the ranks of the long-term unemployed will continue to rise, the housing recovery will remain stalled, and consumer confidence will sag.

The big disconnect between corporate profits and jobs is likely to continue because America’s big businesses are depending less and less on U.S. sales and U.S. workers. Their big profits are coming from two sources: (1) growing sales in China, India, and other fast-growing countries, and (2) slimmed-down US payrolls.

In a typical recovery, profits lead to more hiring. That’s because in a typical recovery, American consumers head back to the malls — and their buying justifies more hires. Not this time. All the hype about Christmas sales over the last few weeks masked the fact that American consumers demanded bargain-basement prices. And the price-cutting dramatically reduced sellers’ margins. In short, profits aren’t coming from American consumers — and profits won’t be coming from American consumers in 2011.

Most Americans don’t have the dough. They’re still deep in debt, can’t borrow against their homes, and have to start saving for retirement.

The Dow Jones Industrial Average is rising because of foreign sales. General Motors is now making more cars in China than in the US, and two-thirds of its total sales are coming from abroad. When it went public last month it boasted that soon almost half its cars will be made around the world where labor is less than $15 an hour.

Wal-Mart isn’t doing especially well in America but Wal-Mart International is booming. And Wal-Mart is hiring like mad outside the US.

General Electric is keeping its payrolls down in the US but plans to invest half a billion dollars in Brazil and hire 1,000 Brazilians, and invest $2 billion in China.

Corporate America is in a V-shaped recovery. That’s great news for investors and everyone whose savings are mainly in stocks and bonds. It’s also great news for executives and Wall Street traders, whose pay is linked to stock prices. All can expect a banner 2011.

But most American workers are trapped in an L-shaped recovery. That’s bad news for the Main Streets and small businesses in 2011. It’s also a bad omen for home prices and sales, and everyone whose savings are mainly in their homes.

Home prices in major metropolitan areas sank last month, the third straight month-to-month drop. I expect home price declines to continue next year. We’re in a double-dip housing market, largely because unemployment remains so bad that millions of Americans can’t pay their mortgages.

None of this bodes well for US employment next year. I expect the official unemployment rate to remain around 9 percent.

In other words, whether 2011 is a great year economically depends which economy you’re in – the one that’s rising with the profits of big business and Wall Street, or the one that will continue to struggle with few jobs and lousy wages.

Sadly, the next Congress is unlikely to do much to reverse any of this. Most Republicans and too many Democrats are dependent on corporate America and Wall Street. Their version of tax reform is to cut taxes on the wealthy and on big corporations, and either raise them on everyone else (sale and property taxes are already on the rise) or cut spending on programs working families depend on.

At some point, perhaps, the disconnect between America’s two economies will become so big and so obvious it can no longer be ignored. Progressives, enlightened Tea Partiers, Independents, organized labor, minorities, and the young form a new progressive movement designed to reconnect America.

Was Qualcomm Stadium flooded recently by sewage or rainwater?

Last week you probably remember was one of the wettest weeks in recent San Diego history. The San Diego River flooded of course, as did the Mission Valley golf course, and a number of hotels were surrounded by water. In fact one hotel, the Premier Inn, had to ferry its guests out by rubber raft, it got so bad.

And in the midst of all this, the Qualcomm parking lot took a major hit, practically being submerged, and the stadium ground level itself was under water. But miraculously, Qualcomm was cleared out by crews working around the clock, and by time the Poinsettia Bowl rowed around (no pun intended), the football field, the seats, and everything else was ready to go.

One of the conversations rowing around the OB Rag office this past week was whether sewage from the flooding actually got into the stadium itself. Instead of the Poinsettia Bowl, perhaps the place could have been nicknamed the “Toilet Bowl.”

Here are some particulars to consider:

the Santee wastewater facility flooded, sending 1.2 million gallons of sewage into the San Diego River.

Ocean Beach beaches were closed off due to sewage contamination – officially for five days – due to the estimated 750,000 gallons of sewage that hit the pristine area.

there were photos and videos of Qualcomm Stadium and it surrounding huge parking lot covered with “brown” water.

it would have been a major PR headache if the City/ Qualcomm/ Poinsettia Bowl people had admitted that San Diego River water and the sewage actually flooded the stadium.

During a bike ride through parts of Mission Valley earlier this week, I was prevented from continuing eastward along my usual route along the River due to areas still under water. I found a couple of City workers from wastewater maintenance monitoring the situation near Fashion Valley and asked them a few questions.

First, they acknowleged that the due to the Santee mishap, sewage got into the River water. Second, they did agree that anywhere the River flooded, there would have been sewage present. But third, they denied that any sewage water got into Qualcomm. Their point was that even if some sewage got into the stadium, it was such a small fraction of the total volume of rainwater and river water, that its impact was insignificant.

Andy Cohen, one of our OB Rag reporters, was at the Poinsettia Bowl, and as he used to work for the Padres and then the Chargers, says “no,” the sewage-tainted waters did not reach inside the stadium. Here’s his take on what happened and why:

The flooding that led to the massive cleanup effort prior to last Thursday’s Poinsettia Bowl game between the Naval Academy and San Diego State was unlikely to have come from an overflowing San Diego River that flooded large portions of the Qualcomm Stadium parking lot.

The ground from the southern boundary of the parking lot (essentially the San Diego River) to the gates of the stadium itself– and even the east tunnel– is at a somewhat significant uphill grade, making it impossible for water to flow from the river to the stadium itself. In fact, only portions of the parking lot’s outer ring were flooded.

However, there are other factors that significantly contributed to the flooding of the stadium floor itself. Most people are not aware that the stadium field is right up against the water table. Remember, the lower bowl of the stadium is a dug out pit and descends approximately 30 feet below normal ground level. During times of excessive rainfall, the water table rises, putting the field partially under water.

Also consider that with seven days straight of heavy rainfall, a bowl shaped structure such as Qualcomm Stadium tends to collect water: Rainwater falls into the seating areas and drains downward onto the field, collecting into a pool. Being that it’s so close to the water table, there is no real drainage system in place to deal with excessive water on the field.

It was this proximity to the water table that foiled plans to lower the field by five feet when the stadium was expanded in 1996. The idea was to lower the field in order to eliminate the view obstruction from the first eight rows of seating in the field level (fans sitting in those seats have their view of the action partially blocked by the players standing on the sideline). But by doing so it would have exposed the field to flooding in the event of even a moderate rainstorm. Thus those plans were scrapped.

December 29, 2010

Next week starts the new Congress, and with it the Tea Party conservatives. What’s their strategy? What will they rally around?

They’ll grouse endlessly about government spending but I don’t think they’ll use any particular spending bill to mobilize and energize their grass roots. The big bucks are in Social Security, Medicare, and defense, which are too popular. And their support for a permanent extension of the Bush tax cuts will make a mockery of any argument about taming the deficit.

Nor will they focus on the debt ceiling. Their opposition to raising it will generate a one-day story but won’t rally the troops or register with the public. Most Americans aren’t particularly interested in the debt ceiling, don’t know what it means, and don’t feel affected by it.

Instead, I expect their rallying cry will be about the mandatory purchase of health care built into the new healthcare law. The mandate is the least popular, and least understood, aspect of that law. Yet it’s the lynchpin. Without it, much of the rest of the law falls apart: It’s impossible to cover all high-risk Americans, including those with pre-existing conditions, unless those at far lower risk are required to buy insurance.

Knowing they don’t stand a chance of getting a direct repeal of the mandate (even if they could get a majority in the House for it, they won’t summon 60 votes in the Senate, and have no possibility of overriding a presidential veto), they’ll try to strip the federal budget appropriation of money needed to put the mandate into effect. This could lead to a standoff with the White House over government funding in general, and a possible government shutdown.

My betting is Tea Party conservatives wouldn’t mind a government shutdown over the healthcare mandate. Unlike Bill Clinton’s showdown with Newt Gingrich, which hurt the conservative cause, Tea Partiers believe this one could be helpful. In their view, it would enable them to stand on principle, dramatize their argument that the Obama administration overstepped with healthcare, and generate a particular event around which they can summon the energy and enthusiasm of their ground troops — all with an eye on mobilizing for the 2012 general election.

Less than a year ago, Francis Campos-Dunn was still working at a county hospital in the San Francisco Bay Area, helping patients navigate the often-maddening bureaucracy required to draw on their health insurance. These days, she has a new set of problems to navigate: how to manage her own care without any insurance of her own, having slipped into an unfortunate but fast-growing slice of the population--Americans who have lost their jobs and now lack health coverage.

Back when she was still working, Campos-Dunn, 42, earned $4,000 a month, enough to make her co-payments for regular medical care. These days, she depends on $300 a month contributions from her 16-year-old son--money he earns at a part-time job--just to pay to the rent. When a recent seizure left her with two broken teeth, she skipped the required treatment and opted to have the teeth pulled instead, because she lacked the funds--a choice that would have previously seemed unthinkable.

As the Great Recession has sown unemployment and downgraded work even for those people who have held on to their jobs, the number of Americans lacking healthcare has swelled beyond 50 million, according to a sobering new report from the Kaiser Foundation.

Among the report's most troubling findings: The number of Americans without any health care coverage grew by more than four million in 2009. That left almost one-fifth of non-elderly people uninsured. Among those between 19 and 29 years old, nearly one-third lacked coverage.

The study underscores the degree to which the recession has accelerated the loss of basic elements once viewed as inextricable pieces of a middle class life. The number of Americans lacking medical coverage now exceeds the population of Spain.

Nearly all Americans over 65 are insured by Medicare, the government-run health care plan, but those beneath that age are increasingly vulnerable to losing health care once provided by their employers or finding themselves unable to afford private coverage, according to the report, "The Uninsured: A Primer."

As those lacking health insurance grow in number, so do those missing out on necessary medical attention. About one-in-four uninsured adults have forgone care in the past year because of costs, compared to only 4 percent of those who have private coverage, according to the report.

Those lacking health coverage are vulnerable to what has become a commonplace financial calamity: confronting a medical emergency, and having to pay for care entirely out of pocket. This year, 27% of uninsured adults used up most or all of their savings paying medical bills, according to the study. Half of these uninsured households had total assets of $600 or less.

Medicaid covers Americans with the lowest incomes, but that fact merely mitigates conditions for people in abysmal circumstances: Medicaid beneficiaries are typically in much worse health than those with private coverage. They are likely to have incomes that place them well below the poverty line, and to suffer health conditions that impede their ability to work, exacerbating their difficulties.

Under the health reforms championed by President Obama, Medicaid is set to expand in 2014 to cover almost all people under 65 with incomes up to 138% of the federal poverty line. That would provide health care to many more Americans who now lack coverage. But until then, many Americans will continue to shoulder the burden of unaffordable health care costs.

The soaring number of people falling through the cracks and going without health insurance is in large part the result of the recession, which has eliminated millions of jobs, along with employer-sponsored coverage. Roughly half of all working age Americans with insurance have it through their employer.

Even among those who have avoided unemployment, millions have been forced to take temporary or part-time positions for lack of available full-time work, often surrendering their benefits in the process.

More than half of those who are officially unemployed have no health coverage whatsoever, according to a Rutgers University study, "The Shattered American Dream: Unemployed Workers Lose Ground, Hope, and Faith in their Future." Those numbers increase to nearly 60% for those who have been unemployed for over six months. Six in ten unemployed Americans have been unemployed for over a year.

Yet even if the economy soon adds more jobs and lowers the ranks of the unemployed, the scarcity of health coverage is likely to endure, argues one of the study's authors, Carl Van Horn, Professor of Public Policy at Rutgers University and Director of the John J. Heldrich Center for Workforce Development. Long before the recession, he noted, having a job conveyed no guarantee of coverage.

"Just recovery of jobs isn't sufficent to address the issue," he said. "A lot of the jobs that people are getting are part-time jobs and/or don't have healthcare benefits attached to them."

And even those who are eligible for healthcare in the wake of job loss cannot always take advantage of what is available to them.

"It's pretty obvious that government policies are confusing," Van Horn said. "A lot of folks are losing their jobs for the first time and they don't know what they're even entitled to."

Paying for healthcare can be one of the first things to go for families dealing with constrained finances. Over 50% of those surveyed said that healthcare was one of the expenses they could not afford to pay.

"We have an employer-based healthcare system," Van Horn said. "And if your lose your job, unless you're old or very poor, you have no health care insurance."

In San Mateo, California, just south of San Francisco, Francis Campos-Dunn understands this fact all too well. For years, she has contended with a variety of often-expensive health problems, making her insurance situation particularly crucial.

Her administrative job at the San Mateo County Hospital provided for her needs and also delivered insurance for her son and a granddaughter. But late last year, she was laid off, and so began a painful and bewildering lesson in the particularities of the American health care system.

Kaiser, the giant health maintenance organization, offered her the option to continue her health insurance for $1,500 dollars a month. But that outstripped her total income-- a disability payment of $1,300 a month.

So Campos-Dunn turned to Medical, California's state-run health insurance--the state's version of Medicaid. But they told her that her income exceeded the allowable limit by $32 a month and denied her claim, she says. Undeterred, she appealed, was granted a hearing and was subsequently approved for the state insurance.

But three weeks later, another letter arrived informing her that once again, she made too much money to qualify for the state's health insurance. Since her unemployment, she has struggled with this ceaseless back and forth with the bureaucracy, going without care for weeks in between.

"I never thought I'd be in this position," she said. "I used to help families get on insurance. I used to hear all these problems. I used to think anything was possible to try to figure out a way around it so they could get health insurance. Now I have no health insurance."

With her medical condition continuing to require care, her battle to keep up has worn her down past the point where she can even muster the effort to continue fighting.

"It got up to a point where I didn't even try to deal with them anymore," she said. "If I ended up in the hospital I'd just pay the bill."

She now owes Kaiser over $55,000, she says. She owes the San Mateo County Hospital--her old employer-- over $22,000.

"I just don't think it's right," she said. "I've been working since I was 15 years old and now I can't access what I need because I make 32 dollars too much."

December 28, 2010

TheLos Angeles Times is reporting that a number of Southern California beaches were hit with raw sewage due to overloaded systems from the rain and storms that hit last week.

As dirty storm runoff rushed seaward during the rains, it overwhelmed some of the region’s sewage systems, rupturing sewer mains, disabling pump stations and surging above manhole covers in a series of spills that swept hundreds of thousands of gallons of waste into the ocean.

Five days after the heaviest rainfall, several beaches, including three in southern Orange County and two in San Diego County, remained closed to protect the public from sewage, pathogens and other pollutants that continue to swirl in the water even after the storm clouds have dissipated.

As we all know, and the LA Times reported:

San Diego’s Ocean Beach was still closed five days after an estimated 750,000-gallon spill. That incident occurred after Sycamore Creek in the suburb of Santee overflowed, flooding a wastewater pump station, forcing sewage out of manhole covers at a golf course, and sending it flowing into the San Diego River.

Yet, except for the sewage spill at Camp Pendelton with 1.1 million gallons, more gallons of sewage came to the waters off Ocean beach than the other beaches that were closed. Laguna Beach had 60,000 gallons, San Juan Capistrano had 50,000 gallons of partially treated sewage. Officials closed a 12 miles of coast from Crescent Bay in Laguna Beach to Poche Beach in San Clemente. A 4.3-mile area including Laguna Beach, Aliso Beach and Doheny State Beach also remained closed to swimmers and surfers.

In most of these cases, the rain caused the volume of material coming through the sewage pipes to at least double, which overwhelmed the system insfrastructures.

The Camp Pendleton spill,

sent more than 1.1 million gallons of partially treated sewage into San Mateo Creek and closed beaches near the creek’s outlet at San Onofre State Beach. The spill, which is believed to have occurred Dec. 21, wasn’t discovered until three days later. The beach remained closed Monday.

LA Times:

Water quality advocates, however, say wastewater agencies should have been prepared to accommodate the stress of a major downpour. ”In our eyes, too much rain is not an excuse,” said Brown, of Orange County Coastkeeper, who added that he plans to seek records from wastewater agencies to find out what exactly went wrong. If it turns out that the spills could have been prevented through improvements to aging pipes, pumps and other infrastructure, the group could file complaints with water quality regulators, he said.

In ths Feb. 17,2009 file photo, an engine technician works on a vessel engine at the Caterpillar company in Friedrichsort near Kiel, northern Germany. More than half of the 15,000 people that Caterpillar Inc., maker of the signature yellow bulldozers and tractors, has hired this year were outside the U.S. (AP Photo/Heribert Proepper, file)

Actually, many American companies are – just maybe not in your town. They're hiring overseas, where sales are surging and the pipeline of orders is fat.

More than half of the 15,000 people that Caterpillar Inc. has hired this year were outside the U.S. UPS is also hiring at a faster clip overseas. For both companies, sales in international markets are growing at least twice as fast as domestically.

The trend helps explain why unemployment remains high in the United States, edging up to 9.8 percent last month, even though companies are performing well: All but 4 percent of the top 500 U.S. corporations reported profits this year, and the stock market is close to its highest point since the 2008 financial meltdown.

But the jobs are going elsewhere. The Economic Policy Institute, a Washington think tank, says American companies have created 1.4 million jobs overseas this year, compared with less than 1 million in the U.S. The additional 1.4 million jobs would have lowered the U.S. unemployment rate to 8.9 percent, says Robert Scott, the institute's senior international economist.

"There's a huge difference between what is good for American companies versus what is good for the American economy," says Scott.

American jobs have been moving overseas for more than two decades. In recent years, though, those jobs have become more sophisticated – think semiconductors and software, not toys and clothes.

And now many of the products being made overseas aren't coming back to the United States. Demand has grown dramatically this year in emerging markets like India, China and Brazil.

Meanwhile, consumer demand in the U.S. has been subdued. Despite a strong holiday shopping season, Americans are still spending 3 percent less than before the recession on essential items like clothing and more than 10 percent less on jewelry, furniture, electronics, and big appliances, according to MasterCard's SpendingPulse.

"Companies will go where there are fast-growing markets and big profits," says Jeffrey Sachs, globalization expert and economist at Columbia University. "What's changed is that companies today are getting top talent in emerging economies, and the U.S. has to really watch out."

With the future looking brighter overseas, companies are building there, too. Caterpillar, maker of the signature yellow bulldozers and tractors, has invested in three new plants in China in just the last two months to design and manufacture equipment. The decision is based on demand: Asia-Pacific sales soared 38 percent in the first nine months of the year, compared with 16 percent in the U.S. Caterpillar stock is up 65 percent this year.

"There is a shift in economic power that's going on and will continue. China just became the world's second-largest economy," says David Wyss, chief economist at Standard & Poor's, who notes that half of the revenue for companies in the S&P 500 in the last couple of years has come from outside the U.S.

Take the example of DuPont, which wowed the world in 1938 with nylon stockings. Known as one of the most innovative American companies of the 20th century, DuPont now sells less than a third of its products in the U.S. In the first nine months of this year, sales to the Asia-Pacific region grew 50 percent, triple the U.S. rate. Its stock is up 47 percent this year.

DuPont's work force reflects the shift in its growth: In a presentation on emerging markets, the company said its number of employees in the U.S. shrank by 9 percent between January 2005 and October 2009. In the same period, its work force grew 54 percent in the Asia-Pacific countries.

"We are a global player out to succeed in any geography where we participate in," says Thomas M. Connelly, chief innovation officer at DuPont. "We want our resources close to where our customers are, to tailor products to their needs."

While most of DuPont's research labs are still stateside, Connelly says he's impressed with the company's overseas talent. The company opened a large research facility in Hyderabad, India, in 2008.

A key factor behind this runaway international growth is the rise of the middle class in these emerging countries. By 2015, for the first time, the number of consumers in Asia's middle class will equal those in Europe and North America combined.

"All of the growth over the next 10 years is happening in Asia," says Homi Kharas, a senior fellow at the Brookings Institute and formerly the World Bank's chief economist for East Asia and the Pacific.

Coca-Cola CEO Muhtar Kent often points out that a billion consumers will enter the middle class during the coming decade, mostly in Africa, China and India. He is aggressively targeting those markets. Of Coke's 93,000 global employees, less than 13 percent were in the U.S. in 2009, down from 19 percent five years ago.

The company would not say how many new U.S. hires it has made in 2010. But its latest new investments are overseas, including $240 million for three bottling plants in Inner Mongolia as part of a three-year, $2 billion investment in China. The three plants will create 2,000 new jobs in the area. In September, Coca-Cola pledged $1 billion to the Philippines over five years.

The strategy isn't restricted to just the largest American companies. Entrepreneurs, whether in technology, retail or in manufacturing, today hire globally from the start.

Consider Vast.com, which powers the search engines of sites like Yahoo Travel and Aol Autos. The company was founded in 2005 with employees based in San Francisco and Serbia.

Harvard Business School Dean Nitin Nohria worries that the trend could be dangerous. In an article in the November issue of the Harvard Business Review, he says that if U.S. businesses keep prospering while Americans are struggling, business leaders will lose legitimacy in society. He exhorted business leaders to find a way to link growth with job creation at home.

Other economists, like Columbia University's Sachs, say multinational corporations have no choice, especially now that the quality of the global work force has improved. Sachs points out that the U.S. is falling in most global rankings for higher education while others are rising.

"We are not fulfilling the educational needs of our young people," says Sachs. "In a globalized world, there are serious consequences to that."

US corporations are being subsidized by the US government to build factories abroad and to ship jobs formerly held by American workers overseas. In addition they are getting all sorts of tax breaks on profits they make selling products into the US market. These policies were designed during Republican administrations generally although Bill Clinton played a big role in this "globalization" process. There are three main goals of globalization from the corporation's point of view: 1) produce where labor and other inputs to the production process are cheapest; 2) sell into whatever markets are most lucrative (right now the US market represents the largest consumer market in the world); 3) pay as little in taxes to any government anywhere in the world. The Obama administration has tried to change some of these tax policies, but to no avail. The latest example of this is that at first the bill giving aid to first responders of 9/11 was going to be funded by not letting corporations continue to deduct expenses for constructing foreign plants from their tax bill. However, Republican objections and obstructionism forced a "compromise" in which that corporate tax "loophole" was left intact. Obviously, if there are tax advantages to constructing plants abroad in addition to the lure of cheap labor, corporations are being encouraged by US government policy to outsource American jobs. Just the opposite should be true. They should be given tax breaks for constructing plants here and employing American workers. The Obama administration has pledged to fix this situation, but with Republican control of the House there is little chance they will be able to accomplish this goal.

Here's how it works. Although the US corporate income tax rate is 35%, most corporations end up paying only 6-7%. This year, Google, which made $5.5 billion in revenues, only paid an effective tax rate of 2.4%. Corporations set up foreign subsidiaries in low tax countries and then shift profits to those subsidiaries. Therefore, they claim that they didn't make those profits in the US where they sold their merchandise but in those foreign countries where they didn't. It's a corporate shell game. You make your profits where the consumer market is good but taxes are high and then shift those profits to a country where the consumer market is bad but tax rates are low. An additional neat trick is that corporations are able to shift their expenses on their foreign operations to the US. Even though the expenses were incurred in the foreign country where their plant is located, for example, for tax purposes they are shifted to the US where they are deducted from their US tax bill. So they have the best of both worlds. They can shift factories to foreign countries where labor is cheapest, and then turn around and deduct the expenses for outsourcing plants and jobs from their US tax bill.

For many companies, however, national combined reporting requirements aren’t an issue—they just create subsidiaries in international tax shelters like Ireland and the Cayman Islands. A tool called transfer pricing lets companies make profits in tax havens while allocating expenses to higher-tax countries, writes the OECD Observer.

...

Google’s “Double Irish” strategy is one popular transfer pricing scheme. Google created two companies in Ireland to execute this maneuver. One pays royalties to use intellectual property (expenses that reduce income tax in Ireland). A second, located in Bermuda, collects those royalties. The meat in Google’s sandwich is the Netherlands, where profits go on their way from Ireland to Bermuda.

“Irish tax law exempts certain royalties to companies in other EU- member nations,” according to the excellent Bloomberg article that describes Google’s acrobatics. “A brief detour to the Netherlands avoids…Irish withholding tax.”

If you think the federal government would want to sink its teeth into those profits by implementing an international combined reporting requirement, think again. The feds would rather get what they can without changing the law: Google and the IRS negotiated for three years before coming to “an arrangement” that let the company execute its transfer pricing strategy, according to Bloomberg.

Transfer pricing is another reason the states are going broke. By locating plants in states where there are few sales, corporations avoid paying taxes in other states where most of their profits are made. By using this strategy with respect to foreign countries, they put their tax avoidance schemes on steroids. Corporations that transfer income abroad even though a lot of it might have been generated in the US are still on the hook if they repatriate those profits. That is if they bring those profits back into the US. But there is no need to. Most corporations never repatriate that income. They leave it parked outside the country because their interest is in constructing plants and facilties outside the US where labor is cheapest.

Halliburton is a good example of a corporation which makes most of its profits inside the US but exports most of its profits abroad. Recently, it moved its corporate headquarters to Dubai.

For decades, the U.S. tax code has encouraged companies like Halliburton to transfer the location of its subsidiaries from the United States to foreign countries. This is one reason why only thirty-six of Halliburton's 143 subsidiaries are incorporated in the United States and 107 subsidiaries (or 75 percent) are incorporated in 30 different countries.

There are two methods by which Halliburton lowers its tax liability on foreign income: (1) By establishing a "controlled foreign corporation" and (2) By establishing a subsidiary inside a low tax, or no tax, country known as a "tax haven."

Controlled foreign corporations are becoming increasingly valuable to corporations because they allow those corporations to not pay any US income tax on profits generated outside the US. By filing a few papers and incorporating a subsidiary in the country where the profits are made, the subsidiary is no longer considered a "US resident" under the tax code. Instead it is considered a "foreign resident." These profits are only taxed if the profits are repatriated which in most cases they never are.

Here is more on how corporate profits are shifted to countries with low or no tax rates:

Congress reported that Halliburton owns 17 subsidiaries in tax haven countries, including 13 in the Cayman Islands, which has no corporate income tax, two in Liechtenstein and two in Panama.

An analysis by CitizenWorks.org found a far greater number Halliburton tax havens. The nonprofit public interest group found that, while Dick Cheney was CEO of Halliburton (between 1995 and 2000), the number of Halliburton subsidiaries incorporated in offshore tax havens rose from 9 to 44. CitizenWorks.org also found that the Fortune 500 companies with the most offshore tax havens are dominated by energy firms, including El Paso (#1), AES (#2), Aon (#5), Mirant (#7), Halliburton (#8), and Williams (#14).

Controlled foreign corporations and tax havens are the result of decades of corporate lobbying in Washington, DC. It has benefited corporate America tremendously. The tax savings to Halliburton, and the corresponding tax loss to individual American taxpayers, are enormous. Halliburton paid only $15 million of their $80 million in total taxes (or 19 percent) to the U.S. government in 2002. The remaining 81 percent of the company's taxes went to foreign governments. Although Halliburton is an "American" corporation on paper, it is actually a foreign corporation that has no allegiance to the United States.

The Obama administration has taken steps to discourage job creation overseas by American corporations and to encourage job creation at home. The likilhood of any of these steps being passed into law is nebulous. If American corporations find that American incorporation becomes too onerous, they can simply incorporate elsewhere like Hallburton did. Nevertheless, here are some of the things Obama is trying to do:

Currently, businesses that invest overseas can take immediate deductions on their U.S. tax returns for expenses supporting their overseas investments but nevertheless "defer" paying U.S. taxes on the profits they make from those investments. As a result, U.S. taxpayer dollars are used to provide a significant tax advantage to companies who invest overseas relative to those who invest and create jobs at home. The Obama Administration would reform the rules surrounding deferral so that--with the exception of research and experimentation expenses--companies cannot receive deductions on their U.S. tax returns supporting their offshore investments until they pay taxes on their offshore profits. This provision would take effect in 2011, raising $60.1 billion from 2011 to 2019.

In the final analysis perhaps the only way to retrieve taxes from corporations using every trick for tax avoidance is a VAT tax. The advantage of a VAT tax is that it is collected at point of sale. So no matter where a corporation chooses to move its corporate headquarters, it will never be able to escape taxation as long as it wants to sell into the American market. This also means that corporate profits aren't subject to manipulation by tax lawyers advising corporations how to get around paying taxes, and corporate lobbyists can't drill loopholes into the tax code. A VAT tax would truly tax profits made from sales in the country where the product was sold instead of allowing profits to be transferred to low tax countries. Also a VAT tax would avoid the transfer of deductible expenses from foreign countries to the US. It would put a stop to the transfer of profits to tax havens and expenses to high corporate tax rate countries like the US.

A VAT tax could also get around the free trade tariff restrictions. Germany imposes a VAT tax on imports to make them equivalent to domestically produced products on which VAT taxes have already been paid. This is only fair, but it also tends to give an advantage to domestically produced products and job creation and maintenance in country. The VAT tax could be charged directly to the corporation whose product is being sold and not to the customer by estimating profits from each sale. Of course, the corporation could raise prices on the product thus effectively transferring the VAT tax to the consumer, but this is not necessarily bad in that it would tend to equalize the advantages of products produced by higher priced American labor. Revenue sharing of the VAT tax between the Federal and state governments would do a lot to alleviate the states' fiscal problems.

In the long run corporations cannot expect to outsource jobs and insource consumer sales indefinitely. The American market cannot sustain 70% of GDP being produced by consumption without American jobs being created to support that consumption. Prudent tax policies will not only encourage domestic job creation but also will recoup much needed tax revenues from corporations who have been escaping from paying their fair share.

December 27, 2010

As an American expat living in the European Union, I’ve started to see America from a different perspective.

The European Union has a larger economy and more people than America does. Though it spends less -- right around 9 percent of GNP on medical, whereas we in the U.S. spend close to between 15 to 16 percent of GNP on medical -- the EU pretty much insures 100 percent of its population.

The U.S. has 59 million people medically uninsured; 132 million without dental insurance; 60 million without paid sick leave; 40 million on food stamps. Everybody in the European Union has cradle-to-grave access to universal medical and a dental plan by law. The law also requires paid sick leave; paid annual leave; paid maternity leave. When you realize all of that, it becomes easy to understand why many Europeans think America has gone insane.

Der Spiegel has run an interesting feature called "A Superpower in Decline," which attempts to explain to a German audience such odd phenomena as the rise of the Tea Party, without the hedging or attempts at "balance" found in mainstream U.S. media. On the Tea Parties:

Full of Hatred: "The Tea Party, that group of white, older voters who claim that they want their country back, is angry. Fox News host Glenn Beck, a recovering alcoholic who likens Obama to Adolf Hitler, is angry. Beck doesn't quite know what he wants to be -- maybe a politician, maybe president, maybe a preacher -- and he doesn't know what he wants to do, either, or least he hasn't come up with any specific ideas or plans. But he is full of hatred."

The piece continues with the sobering assessment that America’s actual unemployment rate isn’t really 10 percent, but close to 20 percent when we factor in the number of people who have stopped looking for work.

Some social scientists think that making sure large-scale crime or fascism never takes root in Europe again requires a taxpayer investment in a strong social safety net. Can we learn from Europe? Isn't it better to invest in a social safety net than in a large criminal justice system? (In America over 2 million people are incarcerated.)

Jobless Benefits That Never Run Out

Unlike here, in Germany jobless benefits never run out. Not only that -- as part of their social safety net, all job seekers continue to be medically insured, as are their families.

In the German jobless benefit system, when "jobless benefit 1" runs out, "jobless benefit 2," also known as HartzIV, kicks in. That one never gets cut off. The jobless also have contributions made for their pensions. They receive other types of insurance coverage from the state. As you can imagine, the estimated 2 million unemployed Americans who almost had no benefits this Christmas seems a particular horror show to Europeans, made worse by the fact that the U.S. government does not provide any medical insurance to American unemployment recipients. Europeans routinely recoil at that in disbelief and disgust.

In another piece the Spiegel magazine steps away from statistics and tells the story of Pam Brown, who personifies what is coming to be known as the Nouveau American poor. Pam Brown was a former executive assistant on Wall Street, and her shocking decline has become part of the American story:

American society is breaking apart. Millions of people have lost their jobs and fallen into poverty. Among them, for the first time, are many middle-class families. Meet Pam Brown from New York, whose life changed overnight. The crisis caught her unprepared. "It was horrible," Pam Brown remembers. "Overnight I found myself on the wrong side of the fence. It never occurred to me that something like this could happen to me. I got very depressed." Brown sits in a cheap diner on West 14th Street in Manhattan, stirring her $1.35 coffee. That's all she orders -- it's too late for breakfast and too early for lunch. She also needs to save money. Until early 2009, Brown worked as an executive assistant on Wall Street, earning more than $80,000 a year, living in a six-bedroom house with her three sons. Today, she's long-term unemployed and has to make do with a tiny one-bedroom in the Bronx.

It's important to note that no country in the European Union uses food stamps in order to humiliate its disadvantaged citizens in the grocery checkout line. Even worse is the fact that even the humbling food stamp allotment may not provide enough food for America’s jobless families. So it is on a reoccurring basis that some of these families report eating out of garbage cans to the European media.

For Pam Brown, last winter was the worst. One day she ran out of food completely and had to go through trash cans. She fell into a deep depression ... For many, like Brown, the downfall is a Kafkaesque odyssey, a humiliation hard to comprehend. Help is not in sight: their government and their society have abandoned them.

Pam Brown and her children were disturbingly, indeed incomprehensibly, allowed to fall straight to the bottom. The richest country in the world becomes morally bankrupt when someone like Pam Brown and her children have to pick through trash to eat, abandoned with a callous disregard by the American government. People like Brown have found themselves dispossessed due to the robber baron actions of the Wall Street elite.

Hunger in the Land of the Big Mac

A shocking headline from a Swiss newspaper reads (Berner Zeitung) “Hunger in the Land of the Big Mac.” Though the article is in German, the pictures are worth 1,000 words and need no translation. Given the fact that the Swiss virtually eliminated hunger, how do we as Americans think they will view these pictures, to which the American population has apparently been desensitized.

Perhaps the only way for us to remember what we really look like in America is to see ourselves through the eyes of others. While it is true that we can all be proud Americans, surely we don't have to be proud of the broken American social safety net. Surely we can do better than that. Can a European-style social safety net rescue the American working and middle classes from GOP and Tea Party warfare?

December 25, 2010

The last days of the lame duck session of Congress were remarkably successful with passage of ratification of the START Treaty, repeal of Don't Ask, Don't Tell, aid for first responders, extension of unemployment benefits, the Food Safety bill and the tax bill. All of these things were things that Obama clearly wanted and did his best to get passed. He deserves a lot of credit as do Harry Reid, Nancy Pelosi and the other Democrats and a smattering of Republicans who made this possible. Obama's personal favorability rating is high and he is cementing his reputation as the last rational man in Washington. Might as well throw in the last sane and compassionate man as well.

But the Grinchy side of me says whoaa! on the Hosannahs. Why should it be a great victory for Obama or anyone that legislation that was a total no brainer like ratification of the START treaty, that had the active support of every prominent Republican that had anything to do with foreign policy, became so difficult to get passed that it was considered a major victory? Why should legislation that any rational, intelligent half way compassionate person was in favor of like aid for the first responders be considered such a great victory? In any rational, compassionate country these bills were total no brainers that would have been passed without any great brou ha ha or fanfare. They would have been passed as a matter of course, just another day at the office, because they were the right thing to do. They would have been passed without any huge struggle. They would have been passed because the American people and all the experts were totally in favor of them. Ditto for the repeal of Don't Ask, Don't Tell. Only in the US where you have a great number of malignant Republican Senators who are against any humane legislation or any legislation which would actually contribute to the security of the nation would these bills be considered to be great victories.

Meanwhile, these rather modest and obvious bills have had everyone worked up into a tizzy while our eyes have been completely taken off the ball of the economy: joblessness is still at 10% official, 17% unofficial, the tax cut bill drilled a trillion dollar hole in the deficit needlessly by giving tax cuts to the rich, people are being foreclosed on and tossed out of their homes illegally, student loan debt now exceeds credit card debt while students do not have normal consumer protections like bankruptcy. The economy is still in a shambles while some measures have been passed which any rational dictator would have passed. Why should this be considered a wonderful victory for Obama? The crux of the matter is that Republicans have done their level best to defeat the most rational, the most humane and the most supported-by-the-people acts of legislation. They have delayed, they have obstructed, they have whined, they have complained, they have used every parliamentary device they could to defeat all of these bills. They have filibustered every routine piece of legislation no matter how mundane. The only thing that seemed to sway them to do the right thing in the final analysis is that they didn't want to be inconvenienced by missing their dinner or their Christmas vacation. That's the crux of the situation not the fact that some minor rational, humane bills got passed and everyone then thinks "Oh, what big victories for Obama!" Obama and most Democrats wanted only what any rational person would want. When they managed to get it, the reaction should be "why was this so difficult, why was this like pulling teeth" not "oh what a wonderful victory."

Rep. Anthony Wiener of New York put it succenctly and I paraphrase, "the passage of these bits of legislation that were supported by virtually everybody should only draw attention to how dysfunctional the Senate is." Harry Reid has a chance to change the arcane Senate rules on January 4 which can only be changed at the start of a new session. Let's pray that he is able to change them in such a way as to end the abuse of the majority by the minority.

Despite the legislative victories of which Obama can be justifiably proud, we are still left with a continuing budget which has essentially defunded Obama's major legislative programs like health care and regulation of the banking industry. We are still left with the situation in which Republicans will threaten to shut the government down rather than fund those programs when the budget has to be renegotiated three months from now. While Obama credits bipartisanship with all these legislative outcomes, he should really be talking about the fact that any sensible person would have voted for them without any great to do. And what lies ahead is probably not more bipartisanship, but Republicans threatening to shut the government down unless they get their way, and their way is to defund social programs while enlarging the military budget. Democrats are the only sensible party; they are actually trying to do something which would benefit the country. Republicans' only interest is to benefit the rich and large corporations because they are their corporate sponsors.

In the final analysis it wasn't an outpouring of bipartisanship or the holiday spirit which got these humane measures passed into law. It was the fact that Harry Reid was willing to keep Republicans in Congress through the Christmas holidays if necessary to get this legislation passed. It was the legitimate use of political force, the only thing Republicans understand, which carried the day. We are thankful at this time of year for Harry Reid's chutzpah and his willingness to back the Republicans to the wall, and, when it comes right down to it, Republicans will only do the right thing if it means that they won't have to be inconvenienced. Otherwise, they will be willing shills for their corporate sponsors.

We wish President Obama, his family and team the best of luck in the coming year and applaud him for his successful efforts. He has accomplished great things so far despite ridiculous odds, and he deserves our praise.

Sao Paulo, Brazil - Yesterday, I wrote about the main takeaway from my ongoing trip to South America -- how Chile and Brazil, the two countries I'm visiting, have, on key issues like defeating poverty, transcended the tired division between left and right the United States seems hopelessly mired in.

After my time in Chile, I flew to Brazil, which is in the midst of an economic expansion -- the Brazilian Boom. It's a boom made all the more remarkable because Brazil's problems were long thought to be intractable: high inflation, high crime rate, high income inequality, high birth rate. As the old joke went, "Brazil is the country of the future -- and it always will be." Well, the future has finally arrived.

The turnaround started with the 2002 election of President Luiz Inácio Lula da Silva, a left-wing, former union activist. When he assumed office, the country's elite feared a Brazilian version of Hugo Chavez. But he showed himself to be less of an ideologue and more of a pragmatist. "I'm not left or right," he said. "I'm a metal worker." Now, as he prepares to leave office next month, he'll be departing with a popularity rating of 80.5 percent.

During his time in office, the number of Brazilians living in poverty has fallen from 49 million to just under 29 million. And although Brazil still has one of the world's greatest income disparities, the country is on the verge of reaching its lowest income inequality level on record.

According to a study coordinated by Marcelo Neri, who heads the Center for Social Policies at the Getulio Vargas Foundation, between 2001 and 2009, the per capita income of the richest 10 percent of Brazilians grew 1.5 percent per year while the income of the poorest 10 percent grew 6.8 percent. "The most surprising aspect of the data," Neri told me when we had dinner Sunday night, "is that the historically most deprived groups, including blacks and those living in the northern parts of Brazil, have experienced the highest income growth."

Among the other greatest hits presided over by Lula: Wages have gone up more than 5 percent during his two terms; unemployment was cut in half; young people are staying in school longer; the inflation rate went from 12.5 percent a year to 5.6 percent; exports have more than tripled; and Brazil now has the eighth-largest economy in the world and is on track to grow 7.5 percent this year.

"The numbers are strong," Nelson Barbosa, Brazil's incoming executive secretary of the finance ministry, told me at lunch on Tuesday, "but we should judge the success of economic policies not only by the numbers, but by the impact they have on the everyday lives of the people."

I got a small taste of that impact today when I visited one of the schools that is part of the Guri Project, a largely government-funded program created to teach music to mostly underprivileged children. I went to a performance 40 children had put together. Speaking to them afterwards, I was moved to hear so many of them talk about how the program -- and the connection to music -- had changed their lives. Some discovered discipline. Some tapped into a newfound passion for music. Some talked about how the program had helped keep them away from risky situations in dangerous neighborhoods. One girl teared up, telling me how the students had become like a family to each other. "Many of these kids," one of the music teachers told me, "have traded guns for musical instruments. And teachers have replaced drug dealers as their role models."

One of the most successful poverty-fighting programs has been the "Bolsa Família," or "Family Allowance" initiative. Under this program, poor families are given direct cash stipends (through the use of debit cards) if they continue to meet certain requirements, like sending their children to school and making sure they get vaccinations and regular medical check-ups. More than 12 million households are currently enrolled.

The program, which Lula expanded when he took office, was almost universally embraced by candidates across the political spectrum in the last election. And it has been exported to several countries -- including the US, where it is the model for "Opportunity NYC" in New York.

As in Chile, much of Brazil's economic improvement is attributable to the government creating conditions that make it possible for the private sector to thrive. As Marcelo Neri told me: "We have maintained a balance -- combining an aggressive public commitment to addressing social issues with financial responsibility and a respect for what the private sector can do."

Franklin Martins, the outgoing minister for social communication, reiterated this. "One of Lula's major successes," he told me, "was to make certain issues, like poverty fighting, part of a shared national agenda -- accepted as such by both major political parties. These included a commitment to a sound currency, and a commitment to the kind of economic growth that would enable us to fulfill our goal of increasing social inclusion. This obligation to helping our poor is no longer limited to one particular party." Indeed, during the last campaign, the conservative candidate vying to succeed Lula called for a 13th month of the "Family Allowance" initiative -- in effect, trying to out-Lula Lula's own party.

Over dinner at Arminio Fraga's home in Rio, with his wife and two children (both of whom are studying for their PhDs in New York), the commitment to reducing poverty and its attendant suffering emerged as an accepted objective both by Arminio, who was the governor of Brazil's central bank during the conservative administration that preceded Lula's, and his wife, Lucyna, who has been working tirelessly for Friends of Renascer ("Rebirth"), an NGO that helps provide access to health care to underprivileged children. "When Arminio was governor of the bank," Lucyna told me, "we had the first fundraiser for Renascer here at the house." That may not be noteworthy in America, but in Brazil, where philanthropy has not traditionally been a big part of the culture, it was -- putting the spotlight on the lives of the millions who have not been on the radar screen of the country's elites.

Which is why I particularly wanted to meet Milu Villela, the largest shareholder in Itaú Bank, the second largest bank in Brazil, who has been a pioneer in promoting philanthropy and volunteerism -- especially among Brazil's young people. "Since 1995," she told me, "volunteering has been my life. I've created a center for volunteers and reached out to hundreds of companies and individuals in Brazil asking them to give back -- whether it's to the arts, to education, or to the environment. We have a long way to go."

Among all the changes in Brazil, the most transformative is the number of people entering the middle class. Between 2003 and 2009, 29 million people took that step up the socioeconomic ladder, and more than half of the population is now considered middle class. As a study entitled "The New Brazilian Middle Class" puts it: "Brazil is becoming a nation of consumers, buying cars, computers, and houses with cash or on credit." Indeed, there are 1,000 new cars on the road every day in Sao Paulo alone (the downside of this robust consumerism: the traffic in this city is horrible. The strained infrastructure has not caught up with the economic boom). As a result of the economic good times, Brazilians have an exceptionally optimistic outlook on their future.

Indeed, in many ways Brazil has become like a photo negative of America. Brazilians are increasingly living the American Dream of upward mobility, while nearly two-thirds of Americans no longer believe their children will live better lives than they did. "You talk to families here," Arminio Fraga told me, "and there is a real sense of pride about how much better their children are doing than they are. You hear things like, 'I don't have a computer, but my daughter does.'"

Maybe we need to rebrand it the South American Dream.

So even as the U.S. remains mired in its stale left vs. right battle, countries like Chile and Brazil are recognizing that they cannot achieve economic growth and political stability without helping move millions from poverty into the middle class.

My South American journey has given a global dimension to my long-held belief that left vs. right is a hopelessly 20th-century framing. The 21st-century divide is shaping up to be North vs. South -- with our side digging in on the wrong side of history.

I mean, consider the scene, early in the book, where Ebenezer Scrooge rightly refuses to contribute to a poverty relief fund. “I’m opposed to giving people money for doing nothing,” he declares. Oh, wait. That wasn’t Scrooge. That was Newt Gingrich — last week. What Scrooge actually says is, “Are there no prisons?” But it’s pretty much the same thing.

Anyway, instead of praising Scrooge for his principled stand against the welfare state, Charles Dickens makes him out to be some kind of bad guy. How leftist is that?

As you can see, the fundamental issues of public policy haven’t changed since Victorian times. Still, some things are different. In particular, the production of humbug — which was still a somewhat amateurish craft when Dickens wrote — has now become a systematic, even industrial, process.

Let me walk you through a case in point, one that I’ve been following lately.

If you listen to the recent speeches of Republican presidential hopefuls, you’ll find several of them talking at length about the harm done by unionized government workers, who have, they say, multiplied under the Obama administration. A recent example was an op-ed article by the outgoing Minnesota governor Tim Pawlenty, who declared that “thanks to President Obama,” government is the only booming sector in our economy: “Since January 2008” — silly me, I thought Mr. Obama wasn’t inaugurated until 2009 — “the private sector has lost nearly eight million jobs, while local, state and federal governments added 590,000.”

Horrors! Except that according to the Bureau of Labor Statistics, government employment has fallen, not risen, since January 2008. And since January 2009, when Mr. Obama actually did take office, government employment has fallen by more than 300,000 as hard-pressed state and local governments have been forced to lay off teachers, police officers, firefighters and other workers.

So how did the notion of a surge in government payrolls under Mr. Obama take hold?

It turns out that last spring there was, in fact, a bulge in government employment. And both politicians and researchers at humbug factories — I mean, conservative think tanks — quickly seized on this bulge as evidence of an exploding public sector. Over the summer, articles and speeches began to appear highlighting the rise in government employment and issuing dire warnings about what it portended for America’s future.

But anyone paying attention knew why public employment had risen — and it had nothing to do with Big Government. It was, instead, the fact that the federal government had to hire a lot of temporary workers to carry out the 2010 Census — workers who have almost all left the payroll now that the Census is done.

Is it really possible that the authors of those articles and speeches about soaring public employment didn’t know what was going on? Well, I guess we should never assume malice when ignorance remains a possibility.

There has not, however, been any visible effort to retract those erroneous claims. And this isn’t the only case of a claimed huge expansion in government that turns out to be nothing of the kind. Have you heard the one about how there’s been an explosion in the number of federal regulators? Mike Konczal of the Roosevelt Institute looked into the numbers behind that claim, and it turns out that almost all of those additional “regulators” work for the Department of Homeland Security, protecting us against terrorists.

Still, why does it matter what some politicians and think tanks say? The answer is that there’s a well-developed right-wing media infrastructure in place to catapult the propaganda, as former President George W. Bush put it, to rapidly disseminate bogus analysis to a wide audience where it becomes part of what “everyone knows.” (There’s nothing comparable on the left, which has fallen far behind in the humbug race.)

And it’s a very effective process. When discussing the alleged huge expansion of government under Mr. Obama, I’ve repeatedly found that people just won’t believe me when I try to point out that it never happened. They assume that I’m lying, or somehow cherry-picking the data. After all, they’ve heard over and over again about that surge in government spending and employment, and they don’t realize that everything they’ve heard was a special delivery from the Humbug Express.

So in this holiday season, let’s remember the wisdom of Ebenezer Scrooge. Not the bit about denying food and medical care to those who need them: America’s failure to take care of its own less-fortunate citizens is a national disgrace. But Scrooge was right about the prevalence of humbug. And we’d be much better off as a nation if more people had the courage to say “Bah!”

December 23, 2010

Two important victories for President Obama this week — the New Start anti-ballistic missile treaty with Russia to reduce weapons and re-start inspections, and the end of Don’t Ask Don’t Tell after a 17-year ban on gays in the military.

Why have Senate Republicans been willing to break ranks on these two, while not a single Republican went along with Obama’s plan to extend the Bush tax cuts on the first $250,000 of income? Why has Obama consistently caved on economic and taxes, but held his ground on foreign policy and issues like gays in the military?

A hint of an answer can be found in another Senate defeat for Obama over the last few weeks that got almost no attention in the media but was a big one: Republicans blocked consideration of the House-passed Disclose Act, which would have required groups that spend money on outside political advertising to disclose the major sources of their funding.

The answer is this. When it comes to protecting the fortunes of America’s rich (mostly top corporate executives and Wall Street) and maintaining their strangle-hold on the political process, Senate Republicans, along with some Senate Democrats, don’t budge.

Bipartisanship is possible on foreign policy. It’s even possible on certain social issues, such as gays in the military. But it’s not possible when it comes to the core economic and political reality of the United States today — the almost unprecedented concentration of income and wealth at the top, and the way it’s being used to corrupt our democratic system.

In this respect, Democrats are better than Republicans, but not much better. Both parties have rejected efforts to close tax loopholes that would treat much of earnings of hedge-fund and private-equity managers as ordinary income rather than capital gains (taxed at 15 percent). Both parties have refused to cap the size of Wall Street’s major banks or force the banks to [come to the] aid of distressed homeowners whose mortgages they hold.

Neither party has had the intestinal fortitude to suggest that taxes should be permanently raised on multi-millionaires. Neither will take the initiative on significant campaign finance reform.

Not even Democrats in Washington will talk about the degree to which the nation’s income and wealth are now concentrated in the hands of a relatively few people, who have more power over our democratic system than since the days of the robber barons of the late 19th century.

Republicans have sold out completely to big corporations, their executives, and Wall Street. But when it comes to money for elections, many Democrats drink at the same trough.

Yet until and unless America’s vast middle and working classes gain a larger share of the gains of economic growth, our economy will never fully emerge from the doldrums. Top earners can’t and won’t spend enough to keep everyone else employed.

The New Start treaty is a big and important victory for the Obama Administration, as is the end of the ban on openly gay soldiers in the military. But neither signals a new start to cleaning up Washington and turning this economy around.

In 2005, language was slipped into the Bankruptcy Abuse Prevention and Consumer Protection Act which effectively removed bankruptcy protections from private student loans. The brazenness of this action shocked even the most jaded experts on the Hill (when it was discovered). After all, this amounts to the same thing as stripping bankruptcy protections from credit cards, or any other type of unsecured, free-market debt. Make no mistake: there are large injustices with the student lending system generally, but this move set a new low.

The banking industry and their lobbyists promised increased loan availability to disadvantaged students in return for the wholesale removal of this critical, free-market mechanism, but never delivered, the record now clearly shows. What they did deliver were tens of billions of dollars in outrageous loans that would make a subprime mortgage broker blush, with APRs as high as 28%, dropped onto the backs of unsuspecting students through deceptive and corrupt marketing techniques for which there simply is no comparison (consider that often, students would call their school's financial aid offices, and unbeknownst to them, at the other end of the line was a student loan marketer pretending to be a university employee, and this point is proven, but we could go on at length here).

It was assumed by all that at the first possibility (i.e. when the Democrats recaptured one or both houses of Congress), this grave injustice would be quickly righted. So in 2007, when Democrats swept both Houses, this painful period for the citizens was clearly at an end. Or was it? The Democrats, to their credit, did introduce legislation to reverse this robbery, but didn't put their back into it, evidently. The first attempt the legislation was quietly killed. A second attempt was narrowly defeated in a House vote thanks to the Blue Dogs cooperation with Republicans like Howard "Buck" McKeon, and others. The third attempt, introduced last Spring, was on a slow road to passage, and would have been fine, but for an inconvenient election in November.

Surely the banking lobbyists charged with keeping this beach head were richly rewarded for their efforts. After all, a leaked Sallie Mae strategy memo that surfaced around the time the Democrats took power in Congress put preserving the current bankruptcy laws as the 2nd highest priority. And over four years, the record is clear that this mission was accomplished.

Consider, however, what is lost to this dangerous and predatory lending system. While we won't be seeing them marching on Washington anytime soon, former students by the hundreds of thousands are currently reeling, devastated by this toxic debt. Their cosigning parents, grandparents, aunts, and uncles who wanted only for their loved one to get a college education now face financial ruin, and that is absolutely not in any way an exaggeration. And for what? So Sallie Mae can reap excessive profits from predatory loans made on a hyper-inflated commodity, which is higher education?

Ironically, the entities who so cleverly led the students into these monstrous debt situations are the same people now chastising the students about not reading the fine print. They now dispense belated words of wisdom on borrower responsibility from on high, effectively insulating themselves from all blame. But the ironies do not end there...the Democrats who were so quick to rush to the financial aid of the financial industry (including Sallie Mae, and the other student lenders), have gone quiet on this final attempt at returning the bankruptcy protections that should have never been taken away, it seems. And where are the beltway advocates? It seems, that the only ones left in this fight are the citizens, and the Congress elected to represent them. Oh..and of course the banks with their money, expert advice, and threats designed to protect their profits no matter the public cost.

Democrats: Do what is critically needed right now, and return at least this obvious critical protection to the consumers before this term expires.

Has the President’s olive branch on extending the Bush tax breaks for the rich opened a new era in bi-partisanship? Doubtful.

Anyone who isn’t worried about loose nukes – nuclear warheads that can travel long distances, and could find their way into terrorist hands – should have his head examined. Russia and the U.S. still have thousands from the Cold War days. The old Start treaty began the job of reducing that number, with mutual inspections to verify both sides were following through. But it lapsed last year. So right now there’s nothing – not only no treaty to continue the process of de-nuking, but no inspection system to make sure Russia isn’t (and to assure Russia that the U.S. isn’t) re-nuking.

Fortunately, Russia and the U.S. have negotiated a New Start treaty that would cut the number of warheads down to about a third, and resume inspections.

But Senate Republicans are balking.

Let’s be clear: The choice isn’t between adopting a New Start treaty or just keeping the old one. The old one ran out a year ago. The choice is a New Start treaty or back to the old days when both sides could build more nukes under a cloud of secrecy.

It’s a no-brainer. But many Republicans, led by Mitch McConnell and Jon Kyl, now say they won’t support New Start.

Why? Six months ago their excuse was the U.S. wasn’t doing enough to make sure our remaining stock of nuclear warheads would be up to par. Now that $84 billion has been allotted to upgrading our nuclear weapons, they can’t make that argument. A month ago they said they didn’t have enough time to consider the treaty. When it was pointed out to them there had been dozens of hearings and briefings, they said they needed more time to think about the inspections built into the treaty. Now they say they don’t like the language in the treaty’s preamble.

Here are the real reasons:

1. Deny Obama a victory. Mitch McConnell has said his number one priority is making sure Barack Obama is a one-term President. He’ll sacrifice the security of Americans in order to rob the President of anything that could be interpreted as a victory, including New Start.

Forget bi-partisanship. To Senate Republicans, it never existed and never will. They went along with the tax deal because it gave them and their supporters everything they wanted and more. They didn’t consider it a victory for Obama; they’re claiming it as a victory for themselves.

2. Stoke up defense spending. I don’t even think Senate Republican leaders mind loose nukes. Failure of New Start would give them an excuse to increase defense spending – the one area of the budget they want enlarged.

Remember: We’re back to Reaganomics. Cut the taxes on the rich, cut government programs for the middle class and poor, and spend lots more on defense.

3. Generate more fear of what’s “out there.” Republicans trade in fear. They’ve mastered the art of turning fear of what’s “out there” into Republican political gains – whether it’s fear of terrorists, immigrants, Russia, China, or communists who may still be lurking somewhere in the shadows. They’re looking to 2012 and stoking up the fear.

Today is the showdown on New Start. Senate Dems will move to cut off debate (they’ll need 60 votes). Final ratification will require two-thirds of the senators present.

We’ll soon discover whether President Obama bought anything with his cave-in to Republicans on tax cuts for the rich.

As of noon EST, GOP Senators Bob Bennett of Utah, Johnny Isakson of Georgia, and Lamar Alexander of Tennessee backed ratification. Sen. Bob Corker of Tennessee is expected to announce his support for ratification later today. Sens. Richard Lugar, Susan Collins, Scott Brown, Olympia Snowe, and George Voinovich have also stated they’ll vote to approve the treaty.

Democrats must pick up at least nine GOP votes to ratify the treaty, assuming every Democrat votes for it

Republican Senator Tom Coburn is singlehandedly set to deny the 9/11 first reponders the aid they are seeking to pay medical bills. And this guy is a doctor no less. He also tied up $1.2 billion in emergency aid the US pledged to Haiti after the devastating earthquakes there. A real humanitarian, this Coburn. I guess the Hippocratic oath doesn't apply any more once you become a US Senator.

Read the following two articles and weep first for the Haitians and then for the 9/11 first responders. These guys are the first to wrap themselves in the flag when anyone mentions 9/11, but the reality is, when it comes right down to it, they don't give a damn about the first responders or the Haitians for that matter. Obama and Harry Reid are lucky that they can use the fact that these guys want to get home for Christmas to force legislation through like the SMART treaty that shouldn't even be the least bit controversial. In fact so many prominent Republicans have come out in favor of it that it would be almost a crime not to pass it, and yet these Republican Senators have done everything they could (unsuccessfully) to see that it would not get passed. The same applies to the repeal of Don't Ask, Don't Tell.

And then Senator Jon Kyl has the unmitigated gall to complain that he has to work overtime and he can't have his dinner when he wants and he may not get to go home for Christmas vacation. Boo Hoo! These guys are so uncaring and inhumane. If it takes the threst of missing Christmas vacation to get them to do the right thing, then so be it. They should be kept in Washington all the way through Christmas and up to January 4 when the new Congress takes over. Let them miss New Year's too.

Senate Republicans have opposed the measure, also called the Zadroga bill, first over concerns that it would take precedence over a plan to extend the Bush tax cuts -- a deal that has since been reached -- and now due to issues with the cost-control measures and $7.4 billion cost of the legislation. That money would go toward covering the medical bills of 9/11 emergency workers who have suffered from health complications following the inhalation of toxic chemicals at Ground Zero.

The current offset proposal would enact three small taxes and fees that are meant to target companies that rely on outsourcing jobs in order to provide goods and services. Coburn said Tuesday, however, that he wants the offsets to come through spending cuts, and would prefer to see the legislation reach a floor vote through committee, rather than being fast-tracked, an action that has been taken to allow a vote on the bill to come before the end of the session.

Support for the measure had apparently been growing before Coburn's announcement. New York Democratic Senators Chuck Schumer and Kirsten Gillibrand, two of the bill's sponsors, both claimed Monday that the bill finally had the votes to pass. That contention appeared to be supported by the recent comments of a some of key Republicans who had encouraged a Senate détente in order to send the package through to the President.

On Tuesday, former New York City Mayor Rudy Giuliani became the latest name on that list.

"This should not be seen as a Democratic or Republican issue. It shouldn't even been seen as a fiscal issue. This is a matter of morality, it's a matter of obligation," Giuliani said on an appearance on a local Fox affiliate.

And last week, former Arkansas Gov. Mike Huckabee said that "every Republican should vote for this bill."

Current New York City Mayor Michael Bloomberg, an independent, also urged the Senate to reach an agreement, saying Monday that the "time for excuses is over."

Last spring, the United States pledged nearly $1.2 billion in emergency aid to Haiti following its tragic earthquake that left hundreds of thousands of people dead and many more homeless.

Yet the Associated Press (AP) reports today that “not a cent of the $1.15 billion the U.S. promised for rebuilding has arrived” to Haitians who badly the need the aid. This summer, both the House and the Senate passed a bill that would make $917 million available for Haiti reconstruction aid. Yet Congress must also pass an authorization bill that directs exactly how the money will be spent, and thus far, the U.S. Senate has failed to do.

The AP conducted its own investigation of why the Senate has failed to pass the authorization bill, and it discovered that a single senator “pulled it for further study.” After calling dozens of senators’ offices, the AP discovered that the senator holding up the bill is Tom Coburn (R-OK). Coburn spokeswoman Becky Berhardt explained that the reason he is holding up the bill is because he objects to the creation of a senior Haiti coordinator — a position that would cost a paltry $5 million over five years — when the United States currently has an ambassador to the country:

Now the authorization bill that would direct how the aid is delivered remains sidelined by a senator who anonymously pulled it for further study. Through calls to dozens of senators’ offices, the AP learned it was Sen. Tom Coburn, a Republican from Oklahoma. “He is holding the bill because it includes an unnecessary senior Haiti coordinator when we already have one” in U.S. Ambassador Kenneth Merten, Coburn spokeswoman Becky Bernhardt said.

The bill proposes a new coordinator in Washington who would not oversee U.S. aid but would work with the USAID administrator in Washington to develop a rebuilding strategy. The position would cost $1 million a year for five years, including salaries and expenses for a staff of up to seven people.

While Coburn continues to hold up much-needed reconstruction aid over a relatively meaningless objection, “just 2 percent of [Haiti's earthquake] rubble has been cleared and 13,000 temporary shelters have been built – less than 10 percent of the number planned.” There are estimated to be 1.3 million Haitians still homeless as a result of the earthquake

First, it is important to remember that although the total package is scored as costing almost $900bn over two years, almost everything in this package simply leaves in place current tax rates and spending. The biggest portion of the tax cut continues the tax rates put in place by President Bush in 2001. The continuation of these tax cuts, including a lower estate tax rate, accounts for almost $400bn of the $900bn.

Adding in the cost of a technical fix to the Alternative Minimum Tax, which is done every year, and the continuation of a series of smaller tax breaks, brings the total to $670bn. This portion of the package buys exactly zero stimulus, since it simply amounts to continuing tax policies already in place. Had these tax breaks not continued, it would have been a drag on growth, but their continuation does not provide any additional momentum to the economy. The $60bn cost of extending unemployment insurance for another year can also be put in this category.

The only net stimulus in this package comes from replacing the $60bn Making Work Pay tax credit in 2011 with a $110bn reduction in the payroll tax and the allowance full expensing of new investment. The latter is projected to cost $55bn a year for the next two years. The full expensing in this deal replaces a provision of the 2009 stimulus package that provided for 50% expensing, which means that the net boost to the economy is half this size.

In sum, the net stimulus for the economy from this package in 2011 will be in the range of $70bn, or about 0.5% of GDP. This is not likely to provide a substantial boost to growth.

While the tax deal will be a net positive to growth for 2011, there are many other factors that are pushing in the opposite direction. First, much of the spending in the original stimulus package will be coming to an end in the first two quarters of 2011. This includes both infrastructure spending for projects that will be nearing completion, and also assistance to state governments that allowed them to better weather difficult fiscal times.

State and local governments continue to face large budget shortfalls. They are finding it increasingly difficult to paper over their budgetary gaps (most state and local governments are required to run balanced budgets), and will have to resort to further cutbacks and tax increases in the year ahead.

House prices are once again falling, with the most recent data showing an 8.5% annual rate of decline. This pace is likely to accelerate in the months ahead. The housing market had been supported through the first half of 2010 by a first-time buyers' tax credit. This had the effect of pulling many purchases forward from the second half of the year or 2011. As a result, sales have fallen by almost one third. As inventories build up again, many homeowners will be forced to make substantial price cuts to sell their houses.

Declining house prices will be another blow to consumption as homeowners recognise that they have lost even more wealth than their had previously believed. The current pace of decline implies a loss of more than $1tn in wealth over the course of a year. The actual loss of wealth could easily be twice as large if the rate of price decline accelerates.

Another factor depressing consumption is the recent bump in interest rates. While interest rates are still extremely low in both real and nominal terms, the current 10-year Treasury rate is close to a full percentage point above the lows hit in the late summer. This rise in interest rates will bring to an end the wave of mortgage refinancing that had helped to free up tens of billions of dollars for consumption. Relatively few homeowners will see much gain in refinancing at current mortgage rates.

It is also important to recognise just how slow the underlying rate of growth in the economy actually is. Most analysts have highlighted the overall GDP growth figure. But this number has been inflated over the last year by a rapid build-up of inventories. Over the last four quarters, GDP growth averaged 3.2%. However, final demand growth averaged just 1.3% over this period. In the most recent quarter, inventories were accumulating at almost the fastest rate on record. It is unlikely that the rate of inventory accumulation will accelerate further. Rather, the rate is likely to slow – meaning that inventories will be a net drag on growth in coming quarters.

In sum, there is every reason to expect that 2011 will be another year of weak growth, with little, if any, decline in the unemployment rate. The economy will be somewhat stronger as a result of this tax package being put in place, compared to a scenario in which nothing was done, but this is very far from the fabled "second stimulus" that some are acclaiming.

MAUNA LOA OBSERVATORY, Hawaii — Two gray machines sit inside a pair of utilitarian buildings here, sniffing the fresh breezes that blow across thousands of miles of ocean.

They make no noise. But once an hour, they spit out a number, and for decades, it has been rising relentlessly.

The first machine of this type was installed on Mauna Loa in the 1950s at the behest of Charles David Keeling, a scientist from San Diego. His resulting discovery, of the increasing level of carbon dioxide in the atmosphere, transformed the scientific understanding of humanity’s relationship with the earth. A graph of his findings is inscribed on a wall in Washington as one of the great achievements of modern science.

Yet, five years after Dr. Keeling’s death, his discovery is a focus not of celebration but of conflict. It has become the touchstone of a worldwide political debate over global warming.

When Dr. Keeling, as a young researcher, became the first person in the world to develop an accurate technique for measuring carbon dioxide in the air, the amount he discovered was 310 parts per million. That means every million pints of air, for example, contained 310 pints of carbon dioxide.

By 2005, the year he died, the number had risen to 380 parts per million. Sometime in the next few years it is expected to pass 400. Without stronger action to limit emissions, the number could pass 560 before the end of the century, double what it was before the Industrial Revolution.

The greatest question in climate science is: What will that do to the temperature of the earth?

Scientists have long known that carbon dioxide traps heat at the surface of the planet. They cite growing evidence that the inexorable rise of the gas is altering the climate in ways that threaten human welfare.

Fossil fuel emissions, they say, are like a runaway train, hurtling the world’s citizens toward a stone wall — a carbon dioxide level that, over time, will cause profound changes.

The risks include melting ice sheets, rising seas, more droughts and heat waves, more flash floods, worse storms, extinction of many plants and animals, depletion of sea life and — perhaps most important — difficulty in producing an adequate supply of food. Many of these changes are taking place at a modest level already, the scientists say, but are expected to intensify.

Reacting to such warnings, President George Bush committed the United States in 1992 to limiting its emissions of greenhouse gases, especially carbon dioxide. Scores of other nations made the same pledge, in a treaty that was long on promises and short on specifics.

But in 1998, when it came time to commit to details in a document known as the Kyoto Protocol, Congress balked. Many countries did ratify the protocol, but it had only a limited effect, and the past decade has seen little additional progress in controlling emissions.

Many countries are reluctant to commit themselves to tough emission limits, fearing that doing so will hurt economic growth. International climate talks in Cancún, Mexico, this month ended with only modest progress. The Obama administration, which came into office pledging to limit emissions in the United States, scaled back its ambitions after climate and energy legislation died in the Senate this year.

Challengers have mounted a vigorous assault on the science of climate change. Polls indicate that the public has grown more doubtful about that science. Some of the Republicans who will take control of the House of Representatives in January have promised to subject climate researchers to a season of new scrutiny.

One of them is Representative Dana Rohrabacher, Republican of California. In a recent Congressional hearing on global warming, he said, “The CO2 levels in the atmosphere are rather undramatic.”

But most scientists trained in the physics of the atmosphere have a different reaction to the increase.

“I find it shocking,” said Pieter P. Tans, who runs the government monitoring program of which the Mauna Loa Observatory is a part. “We really are in a predicament here, and it’s getting worse every year.”

As the political debate drags on, the mute gray boxes atop Mauna Loa keep spitting out their numbers, providing a reality check: not only is the carbon dioxide level rising relentlessly, but the pace of that rise is accelerating over time.

“Nature doesn’t care how hard we tried,” Jeffrey D. Sachs, the Columbia University economist, said at a recent seminar. “Nature cares how high the parts per million mount. This is running away.”

The cost of a college education is rising faster than the cost of medical care and as much as three times as fast as consumer prices in general. But that's just the beginning of the price of admission.

This is the story of a debt crisis few are talking about.

Americans now owe more on their student loans than they do on their credit cards — a debt fast approaching $1 trillion with no end in sight.

Students borrow because they see little choice. A college education, after all, is a key to success. That, it seems, is an article of faith.

For Rick and Tami Tuipers, of the Chicago suburb of Tinley Park, Ill., the world revolves around their kids.

"We've committed to our children's education from day one," said Tami. "That's the commitment we made when they were born."

Zach is a high school sophomore and, at 15, the youngest in the family. Shelby, 18, is a senior and interested in science.

"We've encouraged them to go to college," said Rick. "At least try a semester, a full year."

The Kuipers' nest is already half-empty. Chris is a college freshman, studying engineering at Calvin College, a private school in Grand Rapids, Mich. Kaylee is a junior, also at Calvin, where she recently switched her major to international development after a trip to Africa left her with a keen interest in travel.

"We went around and we visited a bunch of different tribes and villages and just learned about what they were doing for development," she said. "We got to do some fun things, like a safari. And we just, like, studied the land."

It hasn't been easy for the Kuipers to save for college, especially after putting their kids through parochial school. Rick drives a garbage truck, at work every day before dawn. Tami commutes an hour each way to a law office in downtown Chicago, where she's a paralegal.

Like the majority of American families, the Kuipers will borrow money to pay for college. A lot of money. They figure the total — for each child — will come to about $80,000. But for Shelby, who's been applying for college, that $80,000 figure never came up.

Two-thirds of American college students will graduate with a sizeable debt; for the class of 2009, the average debt was $24,000. Add loans for graduate school and parent loans on behalf of their kids and the Kuipers' family estimate of $80,000 per student is typical, according to Lauren Asher, who directs the non-profit Project on Student Debt.

"The need to borrow has grown for all types of students at all types of schools," Asher said. "And the amount that students are borrowing is driven by the share of cost that students and families are expected to cover after aid. Now those costs have risen faster than family incomes, faster than available grant aid."

America's student debt at the end of 2010 is nearly $880 billion. That number is growing by more than $2,800 dollars per second.

But most students, like Kaylee Kuipers, don't dwell on the numbers.

"I don't really know how much (debt) I have," she said. "My mom handles a lot of it for me. ... I just feel like I'm in the career field that I love, so it'll somehow work out."

For a growing number of graduates, though, it's not working out — especially in an economy where well-paying jobs for college graduates are in short supply. Student loan defaults have doubled in the last five years, according to the U.S. Department of Education, and are now approaching nearly a quarter-million defaults a year.

The official student loan default rate, according to the government, is now seven percent. That rivals the default rate for credit cards (8.8 percent) and home mortgages (9.1 percent). Because the government is lending most of the money, every default leaves the taxpayers on the hook.

"The schools keep the money, the students keep the debt, and the taxpayers lose," said Sen. Tom Harkin, D-Iowa, who chairs the Senate Education Committee. "There's a lot of similarities between what's happening with student loans ... and the housing crisis."

Alan Collinge, an activist and author, who drew on his own student loan default to found the group StudentLoanJustice.org, says the student loan crisis is potentially far worse than the mortgage crisis.

"A defaulted home mortgage borrower — and don't get me wrong, it's a horrible outcome — they walk away from their house wearing a barrel and not much else," he said. "In the case of student loans, there is no walking away."

Unlike most other forms of debt, student loans carry almost no consumer protections and little ability to refinance. By law, they can't be wiped out in bankruptcy. Those laws were passed in response to the last student loan crisis in the 1980s. But Collinge believes it created a system he calls predatory.

"These powers would make a mobster envious," he said.

If you default on a student loan today, you could lose everything.

Kyle McCarthy, 28, lives in San Francisco. He has a master’s degree, $72,000 in debt and, he says, no way to pay it back.

"I can't get out," he said. "I'm about to lose my apartment. And my phone's about to be turned off in a couple days. And I have negative money in my account."

McCarthy had hoped to turn his passion for soccer into a career in physical education. But four months after graduation, in a pickup soccer game, he blew out his knee that required major surgery.

Unable to work for months, with medical bills piling up, his loans went into default. Now, the collection agents call day and night.

"I've tried to work out anything for them," he said "Like, 'I can pay this amount of money. I can pay $50 a month.' And it was, 'No.' It was, 'You need to pay the full amount now or, we're just going to take it out of your paycheck.'"

Student debt can even outlive the student.

On Nov. 3, 2009, Ralph Grande and his wife, Joan, lost their only child in an automobile accident. Vincent was weeks away from taking his exam to become a stockbroker when he was killed.

"Does any parent ever bring a child into this world thinking that they would outlive them?" Ralph said. "God, no. God, no."

Ralph and Joan soon learned that not only had they lost their only son, they were on the hook for more than $81,000 in student loans that Vincent had borrowed through New Jersey’s state student loan program.

"What they told us was, 'Well, you co-signed. Too bad,'" said Ralph. "And the longer it takes you to make a payment, the more the interest is going to accrue and the higher the payments are going to become."

Ralph is a car salesman and Joan a schoolteacher. Their personal tragedy has been compounded by the prospect of financial ruin.

"Where am I going to go from here?" said Ralph. "Where do we possibly come up with that kind of money?"

That question is being asked by millions of American students and families.

“Show me your company, and I’ll tell you who you are,” my grandmother would often say with a light Irish lilt but unmistakable seriousness, an admonition about taking care in choosing what company you keep.

On Thursday, I could sense her smiling down through the snow as I stood pinned to the White House fence with Daniel Ellsberg, Chris Hedges, Margaret Flowers, Medea Benjamin, Coleen Rowley, Mike Ferner, Jodie Evans, and over 125 others risking arrest in an attempt to highlight the horrors of war.

The witness was sponsored by Veterans for Peace, a group comprised of many former soldiers who have “been there, done that” regarding war, distinguishing them from President Barack Obama who, like his predecessor, hasn’t a clue what war is really about. (Sorry, Mr. President, donning a bomber jacket and making empty promises to the troops in the middle of an Afghan night does not qualify.)

The simple but significant gift of presence was being offered outside the White House. As I hung on the fence, I recalled what I knew of the results of war.

Into view came some of my closest childhood friends — like Bob, whose father was killed in WWII when Bob was in kindergarten. My uncle Larry, an Army chaplain, killed in a plane crash.

Other friends like Mike and Dan, whose big brothers were killed in Korea. So many of my classmates from Infantry Officers Orientation at Ft. Benning killed in the Big Muddy called Vietnam.

My college classmate with whom I studied Russian, Ed Krukowski, 1Lt, USAF, one of the very first casualties of Vietnam, killed, leaving behind a wife and three small children. Other friends, too numerous to mention, killed in that misbegotten war.

More recently, Casey Sheehan and 4,429 other U.S. soldiers killed in Iraq, and the 491 U.S. troops killed so far this year in Afghanistan (bringing that total to 1,438). And their mothers. And the mothers of all those others who have died in Iraq, Afghanistan, Pakistan. Mothers don’t get to decide; only to mourn.

A pure snow showered down as if to say blessed are the peacemakers. Tears kept my eyes hydrated against the cold.

The hat my youngest daughter knit for me three years ago when I had no hair gave me an additional sense of being showered with love and affirmation. There was a palpable sense of rightness in our witness to the witless ways of the White House behind the fence.

I thought to myself, this White House is a far cry from the “Camelot” administration of John F. Kennedy, who brought me, and so many others to Washington almost a half-century ago. And yet, I could not resist borrowing a song from the play, Camelot: “I wonder what the king is doing tonight. What merriment is the king pursuing tonight…”

Perhaps strutting before a mirror in his leather bomber jacket, practicing rhetorical flourishes for the troops, like, “You are making our country safer.” The opposite, of course, is true, and if President Obama does not know that, he is not as smart as people think he is.

More accurately, the troops are making Obama’s political position safer, protecting him from accusations of “softness” on Afghanistan, just as a surge of troops into Iraq postponed the inevitable, sparing George W. Bush from the personal ignominy of presiding over a more obvious American defeat in Iraq.

Both presidents were willing to sacrifice those troops on the altar of political expediency, knowing full well that it is not American freedom that “the insurgents” hate, but rather U.S. government policies, which leave so many oppressed, or dead.

Despite our (Veterans for Peace) repeated requests over many months, Obama has refused to meet with us. On Wednesday, though, he carved out five hours to sit down with many of the fat cat executives who are profiteering from war.

It seems the President was worried that he had hurt the fat cats’ feelings – and opened himself to criticism as being “anti-business” – with some earlier remarks about their obscenely inflated pay.

Before our witness on Thursday, we read in the Washington Post that Obama told the 20 chief executives, “I want to dispel any notion we want to inhibit your success,” and solicited ideas from them “on a host of issues.” By way of contrast, the President has shown zero interest in soliciting ideas from the likes of us.

‘The Big Fool Said to Push On’

In another serendipitous coincidence, as we were witnessing against the March of Folly in Afghanistan, the President was completing his “review” of the war and sealing the doom of countless more soldiers and civilians (and, in my view, his own political doom) by re-enacting the Shakespearean tragedy of Lyndon the First.

Afraid to get crossways with the military brass, who have made it embarrassingly clear that they see no backbone under that bomber jacket, Obama has just sped past another exit ramp out of Afghanistan by letting the policy review promised for this month become a charade.

Hewing to the script of Lyndon the First, Barack Obama has chosen to shun the considered views of U.S. intelligence agencies, which, to their credit, show in no uncertain terms the stupidity of keeping U.S. troops neck-deep in this latest Big Muddy in Afghanistan — to borrow from Pete Seeger’s song from the Vietnam era.

There is one reality upon which there is virtually complete consensus as highlighted by the U.S. intelligence agencies: The U.S. and NATO will not be able to “prevail” in Afghanistan if Pakistan does not stop supporting the Taliban. Are we clear on that? That’s what the recent National Intelligence Estimate on Afghanistan says.

A companion NIE on Pakistan says there is not a snowball’s chance in hell that the Pakistani Army and security services will somehow “change their strategic vision” regarding keeping the Taliban in play for the time when the United States and its NATO allies finally leave Afghanistan and when Pakistan will want to reassert its influence there.

Should it be too hard to put the two NIEs together and reach the appropriate conclusions for policy?

It is difficult to believe that – after going from knee-deep to waist-deep in the Big Muddy by his early 2009 decision to insert 21,000 troops into Afghanistan, and then from waist-deep to neck-deep by deciding a year ago to send in 30,000 more — Obama would say to “push on.”

The answer lies in the kind of “foolish consistency” Emerson termed the “hobgoblin of little minds.” Out of crass political considerations, Obama continues to evidence a spineless persistence behind this fool’s errand. He seems driven by fear of offending other important Washington constituencies, such as the neoconservative opinion-makers, and having to face the wrath of the be-medaled and be-ribboned Gen. David Petraeus. This is pitiable enough — but a lot of people are getting killed or maimed for life.

‘When will we ever learn?’

To answer this other Vietnam-era song, well, we have learned — many of us the hard way. We need to tell the big fool not to be so afraid of neocon columnists and the festooned left breast of the sainted Petraeus — you know, the ten rows of medals and merit badges that made him so lopsided he crashed down on the witness table and was given a time-out by the Senate Armed Services Committee.

Outside the White House on Thursday, we found ourselves singing “We Shall Overcome” with confidence. And what we learned later of other witnessing conducted that same day provided still more affirmation, grit, and determination.

For example, 75 witnesses braved freezing temperatures at the Times Square recruiting station in New York to express solidarity with our demonstration in Washington.

There in Times Square stood not only veterans, but also grandmothers from the Granny Peace Brigade, the Raging Grannies, and Grandmothers Against the War. Two of the grandmothers were in their 90s, but stood for more than an hour in the cold. The Catholic Worker, War Resister League and other anti-war groups were also represented.

What? You didn’t hear about any of this, including the arrest of 135 veterans and other anti-war activists in front of the White House? Need I remind you of the Fawning Corporate Media and how its practitioners have always downplayed or ignored protests, large or small, against the wars in Iraq and Afghanistan? Dave Lindorff summed the situation up (see http://www.thiscantbehappening.net/node/345 ) .

A Rich Tradition

Civil Disobedience was Henry David Thoreau’s response to his 1846 imprisonment for refusing to pay a poll tax that violated his conscience. Thoreau was protesting an earlier war of aggression, the U.S. attack on Mexico.

In Civil Disobedience, Thoreau asked:

“Must the citizen ever for a moment, or in the least degree, resign his conscience to the legislator? Why has every man a conscience then? I think that we should be men first, and subjects afterward.

“It is not desirable to cultivate a respect for the law, so much as for the right. The only obligation which I have a right to assume is to do at any time what I think right.”

Imprisonment was Thoreau’s first direct experience with state power and, in typical fashion, he analyzed it:

“The State never intentionally confronts a man’s sense, intellectual or moral, but only his body, his senses. It is not armed with superior wit or honesty, but with superior physical strength. I was not born to be forced. I will breathe after my own fashion. Let us see who is the strongest.”

Prior to his arrest, Thoreau had lived a quiet, solitary life at Walden, an isolated pond in the woods about a mile and a half from Concord. He returned to Walden to mull over two questions: (1) Why do some men obey laws without asking if the laws are just or unjust; and, (2) why do others obey laws they think are wrong?

More recent American prophets have thrown their own light on the crises of our time while confronting the questions posed by Thoreau.

Amid the carnage of Vietnam, Fr. Daniel Berrigan, SJ, posed a challenge to those who hoped for peace without sacrifice, those who would say, “Let us have peace but let us loose nothing. Let our lives stand intact; let us know neither prison nor ill repute nor disruption of ties.”

Berrigan saw no such easy option. “There is no peace,” he said, “because the making of peace is at least as costly as the making of war — at least as liable to bring disgrace and prison.”

So, if the making of peace today means prison, that’s where we need to be. It is time to accept our responsibility to do ALL we can to stop the violence of wars waged in our name. Now it’s our turn to ponder those questions.

This article first appeared at Consortiumnews.com.

Ray McGovern works with Tell the Word, the publishing arm of the ecumenical Church of the Saviour in Washington, DC. During his career as a CIA analyst, he prepared and briefed the President's Daily Brief and chaired National Intelligence Estimates. He is a member of the Steering Group of Veteran Intelligence Professionals for Sanity (VIPS).

History will record 2010 as the year Washington became “business friendly.”

Not that it was all that unfriendly before. Some would say the bailouts of Wall Street, AIG, GM, and Chysler were about as friendly as it can get. In addition, Washington gave windfalls to drug companies and health insurers in the new health bill, subsidies to energy companies in the stimulus package, and billions to domestic and military contractors.

But for corporate America it still wasn’t friendly enough. Before the midterm elections, Verizon CEO and Business Roundtable chair Ivan Seidenberg accused the President of creating a hostile environment for investment and job-creation. In the midterms, business leaders overwhelmingly threw their support to Republicans.

So the White House caved in on the Bush tax cuts for the wealthy, and is telling CEOs it will be on their side from now on. As the President recently told a group of CEOs, the choice “is not between Democrats and Republicans. It’s between America and our competitors around the world. We can win the competition.”

There’s only one problem. America’s big businesses are less and less American. They’re going abroad for sales and employees. That’s one reason they’ve showed record-breaking profits in 2010 while creating almost no American jobs.

Consider one of most popular Christmas products of all time – Apple’s iPhone. Researchers from the Asian Development Bank Institute have dissected an iPhone whose wholesale price is around $179.00 to determine where the money actually goes.

Some shows up in Apple’s profits, which are soaring.

About $61 of the $179 price goes to Japanese workers who make key iPhone components, $30 to German workers who supply other pieces, and $23 to South Korean workers who provide still others. Around $6 goes to the Chinese workers who assemble it. Most of the rest goes to workers elsewhere around the globe who make other bits.

Only about $11 of that iPhone goes to American workers, mostly researchers and designers.

Even old-tech American companies made big money abroad in 2010 – and created scads of jobs there. General Motors, for example, is now turning a nice profit and American investors bullish about its future.

That doesn’t mean GM will be creating lots more blue-collar jobs in America, though. 2010 was a banner year for GM’s foreign sales — already two-thirds of its total sales, and rising. In October, GM became first automaker to sell more than 2 million cars a year in China. The company is now making more cars in China than in the United States.And GM has just signed a deal with its Chinese partner to try to crack India’s potentially huge auto market.

Meanwhile, back home in the U.S., GM has slashed its labor costs. New hires are brought in at roughly half the wages and benefits of former GM employees, under a two-tier wage structure accepted by the United Auto Workers. Almost all GM’s U.S. suppliers have also cut their payrolls.

It’s much the same even for America’s biggest retailers. 2010 wasn’t an especially good year for Wal-Mart in the United States. Its third-quarter sales fell, as U.S. shoppers continued to hold back.

But Wal-Mart International is contributing mightily to its bottom line. Its UK business, Asda, will be adding 7,500 new jobs next year. Wal-Mart is also doing well in Japan and Brazil, and hiring like mad in both countries.

So when President Obama tells American CEOs our biggest challenge comes from abroad, you’ve got to wonder. The leaders of American business are already abroad, and doing quite nicely.

Just after the midterm elections, the President’s chief economic advisor, Larry Summers, told a group of top U.S. CEOs that the election was partly a “rejection of elites…that were seen as more citizens of Davos than of their countries.” American CEOs, Summers warned, should “think very hard about their obligations as citizens of this country.”

Yes, they’re citizens. But first and foremost they’re CEOs. And CEOs have to show profits – wherever those profits come from. Under American-style capitalism, profits matter. Jobs don’t.

2010 was the year Washington became even more “business friendly.” The result has been more and better jobs – but not in America.

More than 29,000 troubled American homeowners have been stuck in mortgage modification purgatory for at least a year, with no end in sight, under the Obama administration's anti-foreclosure program, according to a recently released report from a watchdog panel appointed by Congress.

These homeowners were supposed to receive lower payments on a trial basis lasting three months and then gain so-called permanent mortgage modifications--lowered payments lasting five years. But more than a year after beginning their trial phase, they have yet to be granted the permanent relief, leaving them unsure about their ability to hang on to their homes. Meanwhile their lenders continue to report them to credit bureaus as delinquent, impairing their ability to borrow in the future.

The new data, disclosed last week in a report from the Congressional Oversight Panel, added the latest sign of trouble to an anti-foreclosure program that was once supposed to help 3 to 4 million hang on to their homes. It is now on track to aid less than one-fourth that number.

The homeowners stuck waiting for permanent relief now contend with a higher cost of living thanks to lower credit scores and higher mortgage debt. They're also prevented from moving on as they try to keep a mortgage teetering on the verge of foreclosure.

"It's horrifying, but it's not surprising," said Diane E. Thompson, counsel to the National Consumer Law Center. "I hear about this everyday from people. When I go out to do trainings, I have people put their hands up in the room and I try to think of prizes for the person who has the oldest trial mod, and they're routinely 18 months old."

Twenty-eight homeowners who entered the program in March 2009, or more than a year-and-a-half ago, remain in the trial phase. Some 475 have been in trial limbo for 18 months. More than 29,100 borrowers have been stuck in the trial phase for at least a year, data through October show.

"After promises of hope, the fact that so many families remain in financial limbo goes to the heart of our biggest concern: some mortgage servicers on their own simply seem not to be up to the task of effective, widespread mortgage modification," said Richard H. Neiman, New York's top bank regulator and a member of the oversight panel. Neiman added that "Treasury has not been able to hold them fully accountable."

While the Treasury Department discloses the number of homeowners who have been in the trial program for at least six months, Treasury has never revealed the number of borrowers who have been in the trial phase for at least a year. Bank of America, the nation's largest bank by assets, accounted for nearly half of all the aged trials, according to Treasury's latest publicly-released scorecard.

Thompson said the number of homeowners stuck in limbo is likely much higher as mortgage firms self-report their data to Treasury, and are likely to skew the numbers in their favor.

The modification initiative, known as HAMP, long ago was dismissed by housing experts as a failure.

More homeowners have been bounced from the program than have received permanent relief.

The average borrower lucky enough to get into a five-year plan ends up owing more on their mortgage than they did prior to entering the program. Research shows that homeowners in this state, known as being underwater, are less likely to move--such as in pursuit of a job--and more likely to default.

And more than a third of those in so-called permanent mortgages spend more than 80 percent of their monthly income servicing debt, raising questions about the long-term sustainability of the modifications.

The oversight panel said HAMP would prevent less than 800,000 foreclosure, at a cost of about $4 billion. The administration originally allocated $50 billion in bailout funds to help homeowners.

Last week, the Treasury Department official overseeing its bailout programs admitted for the first time that the mortgage modification initiative will not meet the goal laid out by President Obama when he announced the program in February 2009. Then, Obama said it would enable "as many as 3 to 4 million homeowners to modify the terms of their mortgages to avoid foreclosure."

"I think it's apparent from our numbers that we will not have 3 to 4 million" permanent modifications, said Tim Massad, Treasury's acting assistant secretary for financial stability.

More than 2.8 homes received foreclosure notices last year, according to real estate data provider RealtyTrac. The Federal Reserve expects 7.4 million homes to enter foreclosure this year through 2012. It recently revised its projection up from 6.5 million as the crisis has worsened.

Treasury officials say the program's shortcomings are due to mortgage firms' inability to handle the huge influx of distressed borrowers that flooded the system when the housing market soured; the changing nature of the housing crisis, which was once dominated by subprime mortgages and now remains depressed due to a lingering high unemployment rate; and borrowers' lack of maintaining proper documentation describing their circumstances, like monthly income.

To deal with the borrower issue, Treasury redesigned the program to require documentation in order to enter the trial phase, rather than the previous practice of rushing to get homeowners enrolled in the program and asking for their paperwork later.

Treasury maintains that this has led to better results.

But according to the oversight panel's data, nearly 30 percent of borrowers who made their first trial payment in June--and made their payments on time in July, August and September--remain in the trial phase. A little more than half actually converted into a permanent modification, making it the only month dating to March 2009 in which the conversion rate eclipsed 50 percent, data show.

Andrea Risotto, a Treasury Department spokeswoman, cautioned that there is some lag between when a decision on a permanent modification is reached and when that is entered into the system.

Still, Treasury officials argue that even with homeowners remaining in limbo, they're still benefitting from the program as they're able to continue living in their homes, at a reduced rate, and without cost to taxpayers (the initiative only pays for permanent modifications).

"The trial period provides immediate relief to struggling homeowners at no expense to taxpayers," Risotto wrote in an e-mail. She added that Treasury data show that a majority of borrowers rejected during the trial phase end up in alternative foreclosure-prevention programs.

Thompson, who works with homeowners and their advocates, completely disagreed.

"The big overarching thing is, nobody wants to be in a trial mod. Everyone wants resolution in their lives," she said. "Everyone in foreclosure is desperate to get out of foreclosure. It's incredibly stressful, it's humiliating, and shameful. Nobody feels good about it. People want it done, they want it over with, they want to be able to move on."

Also, even though the homeowners are making their payments, they're still being reported as delinquent to the major credit reporting bureaus, Thompson said.

"So think about what that does when they go to apply for a car, or what it does to their credit card rates, or if they're applying for a job, or want to move, or even want to rent a place," she said. "It affects their cost of living and their ability to manage their life in all sorts of ways. Credit is a huge issue."

Finally, when homeowners are in the trial phase their mortgage company tacks on to their mortgage principal the difference between their old monthly payment and the reduced amount. The longer the trial, the more gets added.

Thompson said that for some of these homeowners, that tacked-on amount is enough to tip the scales against a permanent modification when their mortgage company finally decides to run the formula that determines whether they keep their home, or are forced out. A bigger debt load works against homeowners, she added.

Michelle Feliz, a single mother living in Boston, can't afford day care for her one-year-old son. She can't afford new clothes for her teenage daughter. Late last year, she applied for food stamps.

Unlike many Americans increasingly seeking public assistance, Feliz, 35, is employed. Yet what she earns in her job as a secretary does not cover even her most basic needs, leaving her scrambling to keep food on her table.

In the aftermath of the worst economic downturn since the Depression, much attention has been focused on the 15 million people who are officially out of work, yet even among those who have jobs, livelihoods and living standards have been substantially downgraded. Growing numbers of employed people live in near poverty, struggling to make ends meet.

Almost a third of America's working families are now considered low-income, earning less than twice the official poverty threshold, according to a report released Tuesday by the Working Poor Families Project. The recession, which has incited layoffs and wage cuts, reversed a period of improvement: Between 2007 and 2009, as the recession set in, the percentage of U.S. working families classified as low-income grew from 28 percent to more than 30 percent.

Workers who once focused on career advancement now live paycheck to paycheck. The American middle class, in effect, is eroding.

"They're no longer working actively, with a chance to advance and gain more experience and skills," said Brandon Roberts, manager of the Working Poor Families Project and a co-author of the report. "They're just putting pieces together to stay afloat, to meet basic needs."

Last year, 45 million people, including 22 million children, lived in low-income households, according to the report. As breadwinners lost jobs or suffered pay cuts, the report notes, the number of low-income families grew to 10 million last year, an increase of almost a quarter-million from 2008. The problem is worse among minorities: 43 percent of America's working families with a minority parent are low-income, the report finds, compared to 22 percent of white working families.

Feliz, who is Latina, has a job. But she's barely scraping by.

"I had to take this job because it was the only thing I could find," Feliz said. "I was making more money than I'm making now."

Once an officer manager at Oficina Hispana, an English language education program, Feliz was laid off in 2007 when her employer didn't get a crucial grant. She collected unemployment insurance for half a year, she said. The week before the benefits expired, she got her current job as a secretary at the University of Massachusetts Boston.

Her annual salary dropped from $42,000 to $37,000. And her dream of opening a shelter for female victims of domestic violence was deferred.

"Career-wise, that set me back a lot," she said.

She now struggles just to put food on the table. She applied for food stamps in November of last year, she said, but was denied because her salary was just above the cutoff. So she began clipping coupons. When her son came down with a bad fever recently, she feared she would have to make a difficult choice: stay home and risk losing her job, or take him to prohibitively expensive day care. Fortunately, her parents, who also live in Boston, were able to look after him.

"I'm afraid to stay home," Feliz said. "If I take too many days off, I could lose my job."

Feliz, who has an associate's degree from Roxbury Community College, is taking classes in human services and management at UMass Boston, and her employer agreed to help foot the bill. She hasn't given up on her dream, but her focus right now is on preserving her income.

The crisis extends beyond the struggling breadwinners. Children in low-income families suffer from diminished educational opportunities and compromised health care, according to the new report. Nationwide, 35 percent of children in working families are living in low-income households, the report finds, and childhood poverty tends to persist into adulthood.

"That has serious implications for children, not only today, but as they look to the future," Roberts said. "The odds are being stacked against them."

Living in a low-income family can take a psychological as well as financial toll. Feliz has striven to raise her children's spirits, pushing her daughter to do well in school.

"I want her to be able to get a good job," she said, "to have things I'm not able to give her."

President Obama insists that he is a really bad negotiator, therefore the deal he got on the 2-year extension of the Bush tax cuts and the 1-year extension of unemployment benefits was the best that he could do. This package also came with a 1-year cut in the Social Security tax.

This cut will seriously threaten the program's finances if next year, the Republican Congress is no more willing to end a temporary tax cut than this year's Democratic Congress.

The logic here is straightforward. Under the law, the Bush tax cuts were supposed to end in 2010. Tax rates returned to their pre-tax cut levels in 2011. However, the Republicans maintained a steady drumbeat about the evils of raising taxes in the middle of a downturn, even if the tax increase would just apply to the richest 2 percent of the population.

As we saw, President Obama and the Democratic Congress could not muster the votes needed to overcome the Republicans and ended up extending the tax cuts for the richest 2 percent of the population. The Democrats will be faced with a similar situation at the end of 2011 when the Social Security tax cut is scheduled to expire, except that this time the tax cut in question will apply to overwhelming majority of working people.

Also, the House will be controlled by the Republicans and the Senate will be considerably less Democratic. This raises the possibility, if not the likelihood, that the tax cut will remain in place indefinitely, more than doubling the size of Social Security's projected long-term shortfall.

Before we even get to this juncture the Republicans will have another opportunity to impose a really bad deal on President Obama. Sometime in the spring the government will run up against its debt ceiling. This will prevent the government from any further borrowing.

Since the government has a substantial deficit, with spending exceeding revenue, hitting this limit would mean that the government would not have sufficient funds to pay for all its programs. It also would mean that the government could not pay interest or principle on debt that is coming due; in effect requiring it to default on its debt.

The prospect of the U.S. government defaulting on its debt creates the sort of end of the world scenario in which Congress rushed to pass the TARP in 2008. Back then, President Bush, Fed Chairman Ben Bernanke and all sorts of other luminaries told members of Congress and the public that we would have a second Great Depression if the Wall Street banks were not immediately bailed out, no questions asked. And the money flowed.

The prospect of defaulting on the debt will create a similar outbreak of shrill warnings of disaster. This would likely to lead to scenario in which President Obama signs whatever debt ceiling package House Republicans hand him, even if it includes the privatization of Social Security and Medicare and major cuts and/or elimination of other important programs. The argument from the administration will be that they have no choice.

In order to avoid this train wreck, supporters of Social Security and Medicare have to restructure the options. They have to push President Obama to announce in advance that he will never sign a debt ceiling bill that includes cuts to Social Security and Medicare, the countries two most important social programs.

These programs are crucial to the financial security and health of tens of millions of people. If there are to be changes in these programs then they should occur after a full public debate in the light of day, not as the result of Republican trickery and parliamentary game playing.

This would be a hugely popular position since not only Democrats, but also independents and even Tea Party Republicans overwhelming support Social Security and Medicare. Furthermore, the gun, in the form of a potential debt default, is actually pointed at the Wall Street banks, not the public.

A debt default would be a very bad situation and one that we absolutely should try to avoid. But the day after the default, the country would still have the same capital stock and infrastructure, the same skilled labor force and the same technical knowledge as it did the day before the default. In other words, the ability of our economy to produce more than $15 trillion in goods and services each year will not have been affected.

One thing that would not be around the day after a default is Wall Street. The default would wipe out the value the assets of the Wall Street banks, sending Goldman Sachs, Citigroup and the rest into bankruptcy. The recovery for the economy from such a situation will be difficult, but the shareholders of the Wall Street banks would be wiped out and their top executives unemployed.

For this reason, the threat of a default is a gun pointed most directly at Wall Street. Given the power of Wall Street over Congress, is inconceivable that they would ever let the Republicans pull the trigger.

This means that if President Obama is prepared to take the right and popular position of supporting Social Security and Medicare, he will win. This is both good policy and great politics. The public just has to force President Obama to stand up and show some leadership.

WASHINGTON — President Barack Obama tried to sway reluctant Republican senators on Monday to back a new arms control treaty with Russia as GOP aversion to giving a politically damaged president another victory intruded on his national security agenda.

The White House and senior Democrats expressed confidence that they had the votes for the accord that was signed by Obama and Russian President Dmitry Medvedev in April. The two countries negotiated the New START pact to cap nuclear weapons and restart weapons inspections in the spirit of U.S. efforts to reset the relationship between the former Cold War foes.

Proponents edged closer to getting the two-thirds vote they needed for ratification as Republican Sen. Scott Brown of Massachusetts announced he would support the treaty. In recent days, Brown had received a call from Secretary of State Hillary Rodham Clinton. Republican Sen. Johnny Isakson of Georgia, who also heard from Clinton, sent the strongest signal yet that he would support ratification.

Treaty backers also were heartened as several Republicans broke ranks, voting against three GOP amendments that would have effectively killed the treaty. With the help of eight Republicans, Democrats beat back an amendment to increase the number of weapons inspectors on a 64-33 vote. They also rejected a measure to change the accord and increase the number of deployed launchers on a 64-33 vote. An effort to change the treaty to include tactical nuclear weapons also failed, 62-35.

Obama, who delayed his holiday vacation, lobbied senators by phone as he pressed to complete the treaty before January when Republicans increase their numbers by five in the Senate, casting the accord's fate in doubt. Vice President Joe Biden and Clinton also called lawmakers to push for ratification.

Bolstering Obama's argument for quick action, Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, sent a letter to lawmakers reiterating support for the accord.

"This treaty enhances our ability to do that which we in the military have been charged to do: Protect and defend the citizens of the United States. I am confident in its success as I am in its safeguards. The sooner it is ratified, the better," Mullen wrote.

Despite the letter, several conservative Republicans insist the treaty would restrict U.S. options on a missile defense system to protect America and its allies and argue that the accord has insufficient procedures to verify Russia's adherence.

Politics coursed through the debate on Monday as Republicans were still peeved by Senate Majority Leader Harry Reid's decision to interrupt the six days of treaty consideration for votes on the gay ban and an unsuccessful immigration measure, legislation they considered a sop to the Democratic Party's liberal base.

"No senator should be forced to make decisions like this so we can tick off another item on someone's political check list before the end of the year," Senate Minority Leader Mitch McConnell said.

Obama suffered a self-described "shellacking" in the Nov. 2 midterm elections as his party lost control of the House and suffered an erosion in its Senate majority. Yet he has scored two major political wins in Congress' postelection session – overwhelming bipartisan passage of the tax deal he cut with Republicans and repeal of the ban on openly gay members serving in the military.

His top foreign policy priority before the year's end is ratification of the treaty.

Kerry bemoaned the politics atypical for arms control treaties.

"When the leader comes to the floor and says that our national security is being driven by politics, we really need to step back for a moment and calm down and think for a moment about what is at stake," the Massachusetts Democrat said. He later added: "I mean is there no shame ever with respect to the arguments that are made sometimes on the floor of the United States Senate."

State Department spokesman P.J. Crowley said Republican lawmakers had legitimate concerns, but "we believe that we've answered those concerns." So at this point, he said, objections "are more about politics than substance."

Senior Democrats pushed toward a possible decisive vote on Tuesday to cut off debate and set the stage for a final vote later in the week. Republicans and Democrats were discussing amendments to the accompanying resolution – not the treaty – that would address GOP concerns about missile defense and build support for the agreement.

"It's going to be a real slog, house by house combat if you will, but I think we'll be there," Sen. Chuck Schumer, D-N.Y., told ABC's "Good Morning America" on Monday. Schumer also said longtime Mississippi Sen. Thad Cochran was on board, but when questioned later in the day, the Republican told reporters he didn't want to talk about his vote.

Democrats expect to get 57 votes from their caucus, with Sen. Ron Wyden, D-Ore., absent due to cancer surgery on Monday. Five Republican senators – Richard Lugar of Indiana, Olympia Snowe and Susan Collins of Maine, George Voinovich of Ohio and Brown – have said they back the treaty while four others – Robert Bennett of Utah, Judd Gregg of New Hampshire, Tennessee's Bob Corker and Isakson – said they were leaning toward approval.

Corker said he has received several calls from Biden.

In Russia, Foreign Minister Sergey Lavrov warned against any changes to the treaty.

"I can only underline the fact that (the treaty) that was developed on a strict basis of parity, in our view corresponds fully to the national interests of Russia and the U.S.A.," Lavrov told Russia's Interfax news agency. "It cannot be opened up and become the subject of new negotiations."

The treaty specifically would limit each country's strategic nuclear warheads to 1,550, down from the current ceiling of 2,200. It would also establish a system for monitoring and verification. U.S. weapons inspections ended a year ago with the expiration of a 1991 treaty.

December 20, 2010

Dec. 18 (Bloomberg) -- Bank of America Corp. was sued by Arizona and Nevada over home-loan modification programs intended to keep homeowners who borrowed from its Countrywide mortgage unit out of foreclosure.

Instead of working to modify loans on a timely basis, Bank of America proceeded with foreclosures while borrowers' requests for modifications were pending, a violation of a 2009 agreement with Arizona to help borrowers facing the loss of their homes, Terry Goddard, the state's attorney general, said yesterday in a statement.

“We are disappointed that the suit was filed at this time,” Dan Frahm, a Bank of America spokesman, said in an e-mail, referring to the Arizona suit. “We and other major servicers are currently engaged in multistate discussions led by Attorney General Miller in Iowa to try to address foreclosure related issues more comprehensively.”

All 50 U.S. states are investigating whether banks and loan servicers used false documents and signatures to justify hundreds of thousands of foreclosures. The probe, announced Oct. 13, came after JPMorgan Chase & Co. and Ally Financial Inc.'s GMAC mortgage unit said they would stop repossessions in 23 states where courts supervise home seizures, and Bank of America, the largest U.S. lender, froze foreclosures nationwide.

Misleading Consumers

The bank is accused in the Arizona and Nevada lawsuits filed yesterday of misleading consumers about requirements for the modification program and how long it would take for requests to be decided. The bank provided inaccurate and deceptive reasons for denying modification requests, according to the suits.

A consent judgment in March 2009 to resolve an Arizona lawsuit alleging Countrywide engaged in fraud while originating and marketing loans required the company to create a loan modification program for some former Countrywide borrowers in Arizona. Bank of America, which acquired Countrywide in July 2008, assumed responsibility for Countrywide's compliance with the consent judgment, Goddard said.

Bank of America has completed 750,000 loan modifications nationwide, including 30,000 in Arizona and 20,000 in Nevada, Frahm said. He said the company has built four assistance centers in those states, held numerous outreach events, and developed special programs to address the hardest-hit populations.

The Arizona lawsuit, filed in state court in Phoenix, seeks a court order holding the Charlotte, North Carolina-based bank in contempt for violating the agreement and requiring it to pay as much as $25,000 for each violation of the accord plus as much as $10,000 for each violation of the state's consumer-fraud law.

This Tuesday [12/21/10] is an important day in the fight to save the Internet.

As a source of innovation, an engine of our economy, and a forum for our political discourse, the Internet can only work if it’s a truly level playing field. Small businesses should have the same ability to reach customers as powerful corporations. A blogger should have the same ability to find an audience as a media conglomerate.

This principle is called “net neutrality” — and it’s under attack. Internet service giants like Comcast and Verizon want to offer premium and privileged access to the Internet for corporations who can afford to pay for it.

The good news is that the Federal Communications Commission has the power to issue regulations that protect net neutrality. The bad news is that draft regulations written by FCC Chairman Julius Genachowski don’t do that at all. They’re worse than nothing.

That’s why Tuesday is such an important day. The FCC will be meeting to discuss those regulations, and we must make sure that its members understand that allowing corporations to control the Internet is simply unacceptable.

Although Chairman Genachowski’s draft Order has not been made public, early reports make clear that it falls far short of protecting net neutrality.

For many Americans — particularly those who live in rural areas — the future of the Internet lies in mobile services. But the draft Order would effectively permit Internet providers to block lawful content, applications, and devices on mobile Internet connections.

Mobile networks like AT&T and Verizon Wireless would be able to shut off your access to content or applications for any reason. For instance, Verizon could prevent you from accessing Google Maps on your phone, forcing you to use their own mapping program, Verizon Navigator, even if it costs money to use and isn’t nearly as good. Or a mobile provider with a political agenda could prevent you from downloading an app that connects you with the Obama campaign (or, for that matter, a Tea Party group in your area).

It gets worse. The FCC has never before explicitly allowed discrimination on the Internet — but the draft Order takes a step backwards, merely stating that so-called “paid prioritization” (the creation of a “fast lane” for big corporations who can afford to pay for it) is cause for concern.

It sure is — but that’s exactly why the FCC should ban it. Instead, the draft Order would have the effect of actually relaxing restrictions on this kind of discrimination.

What’s more, even the protections that are established in the draft Order would be weak because it defines “broadband Internet access service” too narrowly, making it easy for powerful corporations to get around the rules.

Here’s what’s most troubling of all. Chairman Genachowski and President Obama — who nominated him — have argued convincingly that they support net neutrality.

But grassroots supporters of net neutrality are beginning to wonder if we’ve been had. Instead of proposing regulations that would truly protect net neutrality, reports indicate that Chairman Genachowski has been calling the CEOs of major Internet corporations seeking their public endorsement of this draft proposal, which would destroy it.

No chairman should be soliciting sign-off from the corporations that his agency is supposed to regulate — and no true advocate of a free and open Internet should be seeking the permission of large media conglomerates before issuing new rules.

After all, just look at Comcast — this Internet monolith has reportedly imposed a new, recurring fee on Level 3 Communications, the company slated to be the primary online delivery provider for Netflix. That’s the same Netflix that represents Comcast’s biggest competition in video services.

Imagine if Comcast customers couldn’t watch Netflix, but were limited only to Comcast’s Video On Demand service. Imagine if a cable news network could get its website to load faster on your computer than your favorite local political blog. Imagine if big corporations with their own agenda could decide who wins or loses online. The Internet as we know it would cease to exist.

That’s why net neutrality is the most important free speech issue of our time. And that’s why, this Tuesday, when the FCC meets to discuss this badly flawed proposal, I’ll be watching. If they approve it as is, I’ll be outraged. And you should be, too.

Evidence is mounting that corn ethanol and other basic biofuels are actually worse for the environment than the fossil fuels they're supposed to replace.

by Marie Brill

Who needs $6 billion? I do! Especially during the holiday season when I try to balance my budget and ever-growing Santa wish lists.

I can also tell you who doesn't need $6 billion this year: big oil and gas conglomerates. They just got a little extra via the Volumetric Ethanol Excise Tax Credit (VEETC). If you can believe it, this tax credit--one of the best examples of wasteful spending out there--was attached to the tax cut deal President Obama negotiated with Republicans.

U.S. taxpayers will initially bear this boondoggle's cost. Ultimately, the poorest people around the world--and our planet itself--will pay the bigger price.

Once thought to be a promising renewable fuel, evidence is mounting that corn ethanol and other basic biofuels are actually worse for the environment than the fossil fuels they're supposed to replace. When you take into consideration the impact on the land and the deforestation that results from biofuel-driven agriculture, you see a rise in greenhouse gases.

And, if the BP oil disaster weren't enough, runoff from the fertilizers used to grow biofuel crops has contributed to the "dead zones" along the Gulf Coast. Hasn't the Gulf suffered enough without another environmental threat?

Industrial biofuels aren't just bad for the earth. Biofuels, including corn ethanol, have contributed to the rollercoaster ride that corn prices have been on over the past few years. This volatility isn't good for anyone--neither for the independent corn-growing farmers in Iowa, nor for the smallholder farmers in Mozambique.

When food prices are too low, farmers can't afford to grow underpriced crops. When food prices are too high, consumers go hungry. The rapid growth of biofuels was a major contributing factor to the 2008 global food crisis that pushed 100 million people into poverty and caused 30 million to go hungry.

Even though prices went down, many are still feeling the impact of that price hike. Perhaps you know someone who will have to fast, not feast, this holiday season because they lost their job and can't afford the grocery bill. In many countries around the world, growing numbers of smallholder farmers won't feast this season because they lost their land to industrial biofuel farms in flagrant land grabs. As a result, they can no longer produce their own food nor afford to buy it.

Headlines in the Financial Times, The New York Times, and other publications point to another food price crisis in 2011. And, experts at the International Food Policy Research Institute warn that food crises could soon begin to occur more frequently without changes in the global food system. This information should compel Congress to question the outrageous federal biofuel targets and re-evaluate the costs and benefits of converting food to fuel.

Instead, our lawmakers have handed the biofuel industry a $6 billion giveaway through the ethanol tax credit. Ethanol advocates claim this money supports job growth, but this subsidy will barely make a dent on our stubbornly high unemployment rate. It may hardly even boost ethanol production.

The $6 billion cost is higher than the savings from President Obama's two-year federal pay freeze. According to the Government Accountability Office, not a penny of this subsidy goes directly to helping farmers. This industry giveaway goes to gasoline refiners who blend corn ethanol into gasoline, but it will trickle down to pad agribusiness profit margins at the expense of America's bottom line.

I have two kids, and my family had to make hard choices during this holiday season. I expect my member of Congress to do the same, and next year choose to use my taxpayer dollars for renewable energy sources that actually protect the planet without putting poor people at risk of hunger.

This work is licensed under Creative Commons.

Marie Brill is a Senior Policy Analyst at ActionAid USA. ActionAid is an international anti-poverty agency working in 50 countries, taking sides with poor people to end poverty and injustice together. actionaidusa.org

The recent bill that passed Congress that extended the Bush tax cuts for two years, funded unemployment insurance and did a few other things will undoubtedly create more "economic activity." But will it create jobs? That's the 64 trillion dollar question. Economic activity is not synonymous with job creation although that's the theory Obama is gambling his Presidency on. Economic activity is synonymous with positive GDP growth, but GDP growth has been positive since the third quarter of 2009. GDP growth has been positive for 5 straight quarters and hence by definition the US is officially not in a recession and hasn't been for the entire year of 2010. However, there is still an official unemployment rate of about 10% and an unofficial unemployment rate of 17%. At the same time job growth has been anemic. About a million jobs have been created in 2010 which is more jobs than were created during the entire Bush Presidency, but that isn't even enough to cover new entrants into the work force. About 100,000 new jobs per month are required just to stay even. That's 1.2 million jobs a year. Therefore, taking new entrants into the job force into consideration, there has actually been net negative job growth for the last 10 years including Obama's Presidency!

Something like 8 million jobs were lost during the Great Recession. Currently, there are over 400,000 initial claims for unemployment insurance every week. The statistics are ominous but, what is worse, government officials don't seem to have a clue as to why this is happening. There is no explanatory narrative, and their only theory is that increased economic activity will lead to job creation. Not necessarily so. What is certain is that the Obama tax cut plan will drill another trillion dollar hole in the national debt. And it will likely create jobs not in the US but in China and other Asian countries where labor is much cheaper than in the US. It's called labor arbitrage. When barriers to trade fall as they have with the current free trade penchant, businesses will move jobs to whatever country has the cheapest labor force and in today's world that means China. One is hard put to purchase a product not made in China. Consequently, increased economic activity will mean that GDP will increase as consumers buy more products MADE IN CHINA. That translates into few, if any, jobs created in the US.

The Obama administration is also trying to increase exports to serve the growing consumer markets in the developing countries of the world. That would arguably create jobs in the US. Only problem is that the transnational corporations, which are eager to serve those markets, prefer to locate their production plants not in the US but in those countries next to the emerging consumer markets. That way they get the best of both worlds. They get cheap labor AND they are close to the markets they want to serve. This leaves the US at a huge disadvantage. Corporations are eager to serve the US consumer market which is 70% of US GDP, but they don't want to locate production plants in the US because the cost of labor is too high.

So where does this leave the Obama administration. In a hole, likely, having added greatly to the national debt without having created many jobs, certainly not even enough to accommodate new workers entering the labor force. The Fed's attempts to get people to borrow and spend by lowering interest rates and by quantitative easing have been an abysmal failure when it comes to job creation. The money has been borrowed and invested primarily in emerging markets where profits are greater - not in the US. Government officials and the punditry seem to think that, if only they could get Americans to consume more, all would be well, but all would not be well as consumption is not correlated with job creation as long as everything Americans consume is produced elsewhere.

Automation, computerization and robotization have also decreased the need for much skilled labor. As a result the only jobs left are for those with a minimum of skills and those workers can be acquired cheaply in other countries. Professional jobs are also being outsourced to India and elsewhere as cheap internet connections make it profitable to outsource any jobs whose output is primarily paper which can be transmitted electronically to its final destination. Legal and engineering jobs, therefore, have been essentially outsourced to countries with college educated work forces which can handle professional job tasks. This makes it highly unlikely that the US can educate its way out of this dilemma. There has been much handwringing over the pitiful state of the US educational system which is inferior to those of many other countries of the world. But even improvements in education will not fix the problem that results from the fact that educated professionals in other countries will work for one tenth of the expected salaries in the US.

So what can be done about American jobs? What have other countries done? Germany, for example, has a healthy economy based largely on exports and also on the fact that German consumers buy products mainly produced in Germany. For all intents and purposes Germany has healthy tariffs although they don't call them that. Germany has a VAT tax which must be paid not only by companies producing products in Germany, but also, to be fair, by products entering the country as imports. The imports must pay the entire VAT tax in one fell swoop whereas German producers merely pay at each stage of production which spreads the tax over several companies. So imports are discouraged and German producers are encouraged. Other successful countries have in one way or another encouraged domestic producers. Government subsidies have given certain industries an edge, and, consequently, have sustained jobs in country. The US should learn from the example of other countries.

Obama and others hope that jobs will be created indirectly as a result of tax breaks. But this policy has historically proven to be a failure. It's a continuation of Reaganomics and supply side economics which was practiced by the Bush administration with the result that no net jobs were created in the entire Bush Presidency. The only jobs created by Bush were in the military and with private defense contractors. So Obama is gambling his Presidency on a failed Bush policy. One doesn't need a crystal ball to predict what the outcome will be: anemic job creation and a one term Presidency for Obama.

Other countries have industrial policies in which government works with industry in such a way as to create products both for internal consumption and for a successful export economy. This may involve intelligent subsidies instead of the lobbyist sustained subsidies in the US for malignant industries like oil and agricultural products. Other countries manage to place tariffs on imported products which compete with industries which they are trying to promote. The US penchant for free trade is only shooting itself in the foot. The US government funded itself entirely by by means of tarrifs from its founding up until the First World War - over 100 years. In short, US supply side economic and free trade policies are working to its disadvantage and to the advantage of its competitors. Meanwhile, US workers are being left out in the cold. They are being hung out to dry.

Finally, the one thing that is anathema to Republicans and Tea Partiers is direct job creation by the US government, but that may ultimately be the only alternative left to it after all the monetary and supply side economic policies have been exhausted. Franklin Roosevelt created the Civilian Conservation Corps and the Works Progress Administration which put millions of Americans to work during the 1930s. The US Congress became the country's largest employer. Much needed repairs to infrastructure were carried out as well as other beneficial projects. Today infrastructure is badly in need of repair and there are many useful potential jobs which private enterprise is loathe to undertake because they are not deemed to be profitable. Instead of just giving money to long term unemployed, they could be put to work in ways which would not only benefit the economy but would provide a source of labor for infrastructure improvement and beautification.

December 19, 2010

The grotesque deal to extend the grotesque tax cuts for the wealthiest of the wealthy has rendered unmistakable something that should already have been plenty clear: Republicans will spend money like drunken sailors bearing home equity lines of credit when that seems politically expedient. When the politics shift, Republicans will go back to preaching sanctimoniously about runaway government spending, (and never mind the Iraq and Afghanistan wars fought off-balance sheet, and the tax cuts for people whose worries include finding enough paper to accommodate all the deductions on their tax forms).

But hypocrisy is a yawner in Washington, the easiest charge to make stick on almost anyone. Beneath the obvious ugliness of the same people warning about the pitfalls of deficit spending suddenly finding a fresh $900 billion for a tax-avoidance party, a structurally appealing logic is at work. Our political system just made history easier to digest for future generations, because the tax cut extension provides the ideal ending to a long-running storyline: Life getting grander for the super-rich through the trashing of the economy for pretty everyone else.

The Obama administration has told us repeatedly that it had to accept extending tax cuts for the rich as the price for the votes to continue emergency unemployment benefits for people who have been out of work for six months and longer. This trade may be unpalatable policy -- seven-figure tax savings for people with private tennis courts in exchange for $300-a-week unemployment checks for those who now shop at food banks -- but it makes perverse sense.

The tax cuts handed out to the top one percent of American earners early in the George W. Bush administration exacerbated the long trend toward more and more wealth flowing to the top, while the "bottom" 90 percent of the economy got the backwash -- stagnant wages, and rising costs for health care, housing and education. (Robert Reich lays all this out cogently in his recent book, "Aftershock") The result of this quarter-century of regressive redistribution is that fewer and fewer people can afford to buy homes and cars or pay for clothing and medicine and food without slipping deeper into debt.

We now know how that story ends: Our Ponzi scheme of an economy broke down in late 2007, as the financial system absorbed the reality that it had lent out trillions of dollars to people in no position to pay it back. That's when our political leaders should have commenced a serious discussion about how to build a real economy, one centered on producing goods and services of genuine value (instead of credit default swaps and no-money-down mortgages).

But that would have cost serious money. We might have spent half a trillion dollars building out a smart electrical grid that would have enabled the aggressive embrace of wind and solar power, which holds the promise of generating large numbers of manufacturing jobs for the Rust Belt. We could have significantly increased funding for research in the life sciences and other areas of innovation to seed the ground for future job growth in those promising but risky enterprises.

But just as it became most clear that we needed to invest seriously in a new kind of economy -- an old-fashioned economy, really, based on intrinsic value rather than of accounting gimmicks -- seemingly everyone in Washington started freaking out about the deficit. There was no money for anything, the politicians decreed, offering us a future colored by austerity and the sad acceptance of a New Normal featuring elevated unemployment and a New Poor carved out from the group formerly known as the American middle class.

The deficit fear and the championing of austerity all but ensured a long-term need for emergency unemployment benefits. If there is no money to construct a new economy in which people can do what they actually want to do -- go out and work for a living -- then there must at least be a few stray quarters we can scrape off the floor to keep jobless people from landing on the streets.

Say what you will about this sorry tax deal, but do not accuse the political system of lacking an appreciation for symmetry. Congress and the Obama administration have just brokered a deal in which they ordered up more of what put us here (tax cuts for the super-rich) as the way to get the thing that those tax cuts helped necessitate: meager checks for the throngs of people camped out in unemployment offices across the nation.

Unions, as you might certainly expect, have been having a rough time during the current recession. How rough? Well, overall, union membership declined by a whopping 771,000 over the past year.

The number of workers in unions is still large - around 15 million. But that's only a little more than 12 percent of the country's workforce. There is one bright spot: more than one-third of public employees are in unions.

The figures for workers in private employment, however, show that only about 7 percent of the private sector workforce is unionized; that's the lowest percentage since 1900. That's right - the lowest percentage in 110 years.

Unions are fighting hard to reverse the downward trend, and although many outside the labor movement openly doubt - or at least wishfully think - that it can't be done, I think they're wrong. The doubters are forgetting that it's been done before - and it's been done in the face of obstacles that were at least as great as those confronted by union adherents today.

It began 75 years ago last month, in November of 1935, when eight affiliates of the American Federation of Labor (AFL) put together what soon became the independent Congress of Industrial Organizations (CIO). Their aim was to mobilize the racially and ethnically mixed mass of generally unskilled workers in the steel, rubber, auto, meatpacking, and other basic industries.

The AFL had largely ignored the industrial workers in favor of skilled and semi-skilled white craftsmen who were organized into separate unions according to their trades - plumbing, printing, carpentry, and so forth - rather than by industry.

That kept most workers isolated from each other and enabled the industrial corporations that dominated the economy to unilaterally set pay and working conditions at the lowest possible levels.

The CIO leaders believed that workers could not make a decent living and that the labor movement could not grow - and, in fact, might not even survive - unless workers were brought together in tight solidarity across the industrial fields rather than through AFL's craft unionism.

The issues today are different, but the basic need for solidarity remains, as does the need to organize workers whatever their occupations.

That won't be easy with only about 12 percent of today's workforce in unions. But when the CIO began in 1935, less than 10 percent of the country's workers were in unions, and they faced a Great Depression that was much worse than today's Great Recession.

The labor movement hit rock bottom during the Depression of the 1930s, but, finally, unemployment became so widespread and pay and working conditions became so bad that large numbers of workers rebelled - most under the banners of the CIO.

President Franklin Roosevelt, fearing revolution, quickly pushed through Congress bills that in effect put the government behind the workers' attempts to organize. They were granted the legal right to organize and to strike - and to choose by majority votes unions to represent them in collective bargaining with their employers.

Millions of workers flocked to unions, CIO and AFL unions alike. Millions engaged in strikes and other militant actions to press their bargaining demands. Pay rose substantially. Workers won unheard of fringe benefits. Working hours were reduced without reductions in pay. Grievance procedures were instituted. Job security was greatly enhanced.

Most importantly, the living standards of ordinary Americans were raised. The United States at last had a true middle class.

As the CIO grew, so did the AFL. By the time the competing organizations merged in 1955 to form the AFL-CIO, one of every three US workers belonged to a union.

The vital, demanding and essential task of today's labor leaders is nothing less than to accomplish what their predecessors did when they formed the CIO three-quarters of a century ago - nothing less than to bring new life to the American labor movement.

December 18, 2010

Shepard Smith excoriated the Senators who are holding up the so-called "Zadroga Bill" to assist 9/11 first responders who suffer from medical problems as a result of their time at Ground Zero. The bill, which provides $7 billion for the responders, passed the House but is being held up by Republicans in the Senate.

Speaking to Fox News colleague Chris Wallace on Friday, Smith asked, "How do they sleep at night after this vote on Ground Zero first responders from 9/11? Are they going to get that done, or are we going to leave these American heroes out there to twist in the wind?"

Wallace said he agreed that the bill needed to be passed.

Smith said he had watched Jon Stewart's Thursday show, which was devoted exclusively to the bill. He called Stewart "absolutely right," and said the holdup on the bill was shameful:

"Who's going to hold these people's feet to the fire? We're able to put a 52 story building so far down there at Ground Zero, we're able to pay for tax cuts for billionaires who don't need them and it's not going to stimulate the economy. But we can't give health care to Ground Zero first responders who ran right into the fire? Went down there to save people? Do people know what this city was like that day? People were walking over bridges, they were covered in ash, they were running for their lives, they were crying, their family members were dead. And these people ran to Ground Zero to save people's lives. And we're not going to even give them medicine for the illnesses they got down there? It's disgusting, it's a national disgrace, it's a shame and everybody who voted against should have to stand up and account for himself or herself."

WATCH:

Smith continued making the comparison to the tax cuts, adding, "We spend a lot more money giving Warren Buffett his income tax refunds than we do doing anything for those people don't we?"

Supply-side economics prevailed-at least politically-late Thursday, as the US House grudgingly approved President Obama's deal with congressional Republicans to extend Bush-era tax cuts for billionaires, creates broad estate-tax exemptions for millionaires and shapes economic policies based on tax cuts rather smart investment in job-creating infrastructure projects, schools and an engaged public sector.

Supply-side economics prevailed—at least politically—late Thursday, as the US House grudgingly approved President Obama's deal with congressional Republicans to extend Bush-era tax cuts for billionaires, creates broad estate-tax exemptions for millionaires and shapes economic policies based on tax cuts rather smart investment in job-creating infrastructure projects, schools and an engaged public sector.

The House vote ended two weeks of wrangling over the deal that was generally popular with Republicans who almost giddy at prospect that a Democratic president would make tax cuts so central to his economic agenda, but was sharply criticized by leading Democrats and Vermont Independent Bernie Sanders as a reanimation of Reaganomics that would widen the gap between rich and poor, starve federal, state and local programs of needed resources, expand deficits and potentially undermined Social Security.

Some of the tax cuts White House included in the agreement were beneficial to working families, and the deal also includes an extension of unemployment benefits. That, and pleas from Obama that a defeat of the package could end his presidency, secured sufficient Democratic support to clear the House-where opposition had threatened the measure.

"I applaud President Obama for his side of the ledger," a restrained House Speaker Nancy Pelosi, D-California, said after the House voted 277-148 for the measure . "I'm sorry the price that had to be paid for it is so high."

DeFazio's allies, and there were many of them (even among the Democrats who ultimately voted for a bill after their party's president pleaded for support), argued that the measure would do little to help the hardest hit Americans while returning to the unsustainable defficit spending of the Reagan era.

"Wake up and listen to the sirens," California Congressman Sam Farr shouted on the House floor. "I can't believe you talk about this bill as fiscal sanity. It's fiscal insanity."

The fiscal insanity is likely to spread, as Senate Democrats on Thursday abandoned efforts to pass an omnibus spending bill to fund the federal government in the coming year. That move, in the words of veteran Washington observer and Politico Capital Hill writer David Rogers has the effect of "pushing major spending decisions into the next Congress and giving Republicans immense new leverage to confront President Barack Obama priorities.

Ultimately, most Democratic leaders in the House recognized that threat.

Pelosi did not vote on the measure that she steered to approval in one of the last acts of her speakership, while most members of her leadership team cast "no" votes.

Only Majority Leader Steny Hoyer, of Maryland, backed the final measure. Majority Whip James Clyburn, of South Carolina, opposed the deal, as did Democratic Caucus chair John Larson of Connecticut, Caucus vice chair Xavier Becerra, of California, and Assistant to the Speaker Chris Van Hollen, of Maryland.

Ultimately, 112 House Democrats, most of them members of the Congressional Progressive Caucus and the Congressional Black Caucus but with a smattering of Democrats from across the party's ideological spectrum.

While Thursday's House vote ended the fight over this particular deal. It also set up the next round of fights over essential questions regarding Social Security.

"I think it's a bad deal," explained DeFazio as he outlined flaws in the package. "It will add $858 billion to our deficit over the next two years. This is done under the premise that these sorts of tax cuts, trickle down tax cuts-on estates over $10 million, incomes over $250,000, and 100% expensing for wealthy corporations who are sitting on huge piles of cash-are necessary to put Americans back to work. I think we could have taken many more effective measures at much less cost to put Americans back to work."

But, the Oregon Democrat added, "one of the worst aspects of this bill is that it will take $112 billion from the Social Security Trust Fund and require that we borrow money, probably from China, to replace that money to make Social Security whole. It's the first time in 75 years, since President Roosevelt created Social Security that opponents of the program are poised to undo the New Deal and turn it into a raw deal for America's seniors, the taxpayers and working men and women. At the end of 2011, the Republicans will insist on extending the payroll tax holiday because the expiration of the holiday would increase taxes on working people. And to pay for the extension, it's likely they will demand cuts in Social Security benefits."

DeFazio's right when he says: "That's not the kind of security the American people who are dependent upon Social Security, or who will be dependent upon Social Security, need. This is a raw deal for seniors, taxpayers and working men and women."

December 17, 2010

More than thirty years ago, Ronald Reagan came to Washington intent on reducing taxes on the wealthy and shrinking every aspect of government except defense.

The new tax deal embodies the essence of Reaganomics.

It will not stimulate the economy.

A disproportionate share of the $858 billion deal will go to people in the top 1 percent who spend only a fraction of what they earn and save the rest. Their savings are sent around the world to wherever they will earn the highest return.

The only practical effect of adding $858 billion to the deficit will be to put more pressure on Democrats to reduce non-defense spending of all sorts, including Social Security and Medicare, as well as education and infrastructure.

It is nothing short of Ronald Reagan’s (and David Stockman’s) notorious “starve the beast” strategy.

In 2012, an election year, when congressional Democrats have less power than they do now, the pressure to extend the Bush tax cuts further will be overwhelming.

Worse yet, the deal adds to the underlying structural problem that caused the Great Recession in the first place.

Since Ronald Reagan was president, median hourly wages have barely budged, and America’s vast working and middle classes have taken home a steadily smaller share of the nation’s income (adjusted for inflation). The typical male worker today is earning less than the typical male worker thirty years ago.

Yet the richest 1 percent of Americans is now taking home a larger percentage of the nation’s income than at any time since 1928. And we recall what happened in 1929.

Unless the vast majority of Americans has enough purchasing power to keep the economy going without going ever more deeply into debt, the economy will eventually go over a cliff.

That’s what happened in 1929 and 2008.

By the late 1990s the middle and working classes could keep spending — and thereby keep the economy moving — only by adding debt. This strategy ended when the housing bubble burst in 2007.

Without their spending, there can be no buoyant recovery.

Yes, the pending tax bill will give America’s middle and working classes slightly more cash next year. But only for one year. They won’t spend it. They’ll use it to help pay down their debts.

Will lower taxes on the rich spur them to create more jobs? Not a chance. Since 1980, Reagan’s supply-siders have said lower taxes on the rich will trickle down to everyone else. Nothing could be further from the truth.

Look at history.

During the almost three decade spanning 1951 to 1980, when the top rate was between 70 and 92 percent, the average annual growth in the American economy was 3.7 percent.

Between 1983 and the start of the Great Recession, when the top rate ranged between 35 percent and 39 percent, average growth was 3 percent.

Supply siders are also fond of claming that Ronald Reagan’s 1981 tax cuts caused the 1980s economic boom. There is no evidence to support this claim. In fact, that boom followed Reagan’s 1982 tax increase. The 1990s boom likewise was not the result of a tax cut; most of it followed Bill Clinton’s 1993 tax increase.

Nor did George W. Bush’s tax cuts trickle down. Between 2002 and 2007 the median wage actually dropped. And Bush’s record of job creation was pathetic relative to Bill Clinton’s, when taxes were higher. Under Clinton, America added 22 million net new jobs. Under Bush, barely 8 million.

So why are Democrats voting for Reaganomics?

They say they have no choice — either vote for this or watch taxes rise on everyone starting January 1.

That Democrats have allowed themselves to get into this fix is a testament to either their timidity, obtuseness, or dependence on the campaign contributions of those at the top.

Are you one of the lucky ones? Have a good job, live in a nice neighborhood, enjoy your cozy home? Think foreclosure only impacts the reckless or the unemployed?

Think again.

George Mahoney worked and saved and built his cozy colonial-style home in Lynnfield, Massachusetts in 1981. There, he and his wife raised three lovely daughters. For many years, the Mahoneys paid down their relatively small mortgage with their local bank -- a division of Bank of America (BofA). In 2007, they took out a second mortgage to help a daughter start a small business. Two wage earners, a great credit record -- the loan was a breeze. That was when the trouble began.

About a year after getting the second mortgage, BofA started notifying George that his payments were late. Soon they jacked his credit card interest rates from seven percent to twenty-eight percent. Next, they ruined his credit record. His Sears card dropped from a $10,000 limit to a $500 dollar limit. Then one day in the fall of 2009, BofA initiated foreclosure on the house he had built and owned for 28 years.

The only problem? The Mahoneys had never missed a single payment on either their first or second mortgage.

Initially, George thought the problem would be easy to fix. He went down to his local branch to get help, but the local employees were rebuffed by corporate headquarters. So he started getting a receipt for each mortgage payment and faxing it to BofA headquarters. He also started the first of thousands of calls. Usually, BofA staff would readily concede that he was right. But even if they initiated a "fix" it never lasted more than 90 days, when the saga would start over again. In the last few years, he has received foreclosure notices twice - most recently in October 2010.

"Banks shouldn't be allowed to ruin people's lives this way. My stress level for the past year and a half has been a 10 and my wife is a wreck," George explained. His wife, Marianne, confirms the toll the trial has taken on the family. "The whole thing is a nightmare. The stress we live under is unbearable and it's embarrassing too. No one can help us, no one can do anything and it's ruined our credit. I have always been proud to have perfect credit," she adds, the strain evident in her voice.

After receiving a foreclosure notice in October, hiring a lawyer to send urgent letters to BofA and even after repeated talks with top-level staff in the office of BofA President and CEO, Brian Moynihan, the Mahoneys are still in jeopardy.

Bank of America Fraudclosure Central?

Recently-released data from the Federal Reserve shows that BofA received almost one trillion dollars ($931 billion) in taxpayer assistance during the financial crisis. The Fed has also been investigating snowballing allegations of fraud in the foreclosure process, allegations that include false notarizations, false affidavits, accounting fraud, abusive fees, false practice of the law and more. Fed Board Governor Daniel Tarullo told Congress that the problems identified "raise significant reputation and legal risk for the major mortgage servicers... requiring immediate remedial action." But will it come in time to aid the Mahoneys?

The Mahoney's experience indicts endemic accounting problems at BofA. Payments are misapplied constantly and the default position is abusive foreclosure. The bank reports some 1.3 million customers behind on their payments, but can regulators trust any data coming out of BofA? How many of these people are trapped in the same hell as the Mahoneys?

In a lengthy interview with the New York Times this weekend, Brian Moynihan reviews his first year as BofA chief. "I feel proud of what we have done," he said. "You never want to have a customer feel that something isn't right." But given BofA's track record, Moynihan's cheerful "there is not a better job in the world!" tenor strikes a surreal note.

Help May Be on the Way

On Tuesday, Iowa Attorney General Tom Miller, leader of the 50-state task force on mortgage fraud, met with more than 100 people from 15 states. In the crowd were representatives from community, faith, and labor organizations, foreclosure victims and struggling homeowners from across the country.

Led by the feisty folks at PICO National Network, National People's Action and Iowa Citizens for Community Improvement, the participants presented Miller with hundreds of case files documenting foreclosure fraud, abuse and plain malfeasance.

The group burst into a spontaneous round of applause when Miller said in no uncertain terms: "We will put people in jail." Miller also said he supports a settlement with the big banks that requires significant principle reductions, loan modifications, and compensation for victims -- key demands of the community groups.

As the holidays approach, too many Americans will be losing their homes because of hard times. An untold number will be losing their home due to the fraudulent behavior and stark indifference of the nation's largest bailout-out banks. Let's hope the Mahoneys are not among them.

December 16, 2010

Banks have started foreclosures on more than 2,500 homeowners still in the process of applying for mortgage modifications, according to a new survey of 96 consumer attorneys.

"People every single day are being put into foreclosure while they're waiting for modifications," said Ira Rheingold, director of the National Association of Consumer Advocates, which conducted the survey in November with the National Consumer Law Center. "It's all related to the broken mortgage servicing system."

The mortgage-servicing system found itself in the spotlight this fall when employees at big banks admitted in sworn depositions to signing off on foreclosure filings without verifying any of the information. Banks and the government have insisted it's just a paperwork problem and no homeowners have been harmed.

Rheingold and other consumer attorneys argued that the unverified documentation is yet another symptom of a system that routinely seizes homes under false pretenses.

"I'm not sure whether it's incompetence or intentional venality," Rheingold said. "The fact they can't modify someone's loan and at the same time stop a foreclosure is ridiculous."

Banks are required to evaluate all delinquent borrowers for the Obama administration's Home Affordable Modification Program, its signature foreclosure-relief effort, and to solicit applications from borrowers who meet eligibility requirements. The program drastically reduces monthly payments for eligible borrowers, but more have been bounced from HAMP than have received "permanent" five-year modifications.

Homeowners are often shocked and confused when they discover that after they've been encouraged to apply for a modification, the foreclosure process has continued -- even though a directive from the Treasury department this year forbade servicers from proceeding with foreclosures on HAMP applicants. The Treasury Department has not punished any servicers for breaking the program's rules, though a watchdog report released this week said Treasury is considering witholding incentive payments for 132 modified loans. Most of the lawyers said their clients had been making payments exactly as they'd been told to by their bank.

Wednesday's report "means there's massive noncompliance with HAMP because there's no enforcement mechanism," said Diane Thompson, an expert on mortgage servicing and a lawyer for the NCLC.

The 96 attorneys said they represent more than 1,200 homeowners "who had been placed into foreclosure due to misapplication of payments, improper fees, or force-placed insurance," according to the survey.

"I was surprised at how large the numbers were in every category," Thompson said. "From not very many attorneys we get more than a thousand homeowners in every category being put into foreclosure wrongly."

Thomas Paine, the author of Common Sense, was the guy who put into words, so that the average person could understand it, the whys and wherefores of the American revolutionary cause. He was one of the founding fathers in the truest sense although he was later discredited by the Federalists and by conservatives ever since. He is the one who wrote the immortal words: "These are the times that try men's souls." His books and pamphlets sold in unheard of quantities for the 1770s. At the end of the revolutionary war, Paine was a popular hero.

But he went on from there to be involved in the French revolution and to try to foment revolution in Britain. In France he narrowly escaped the guillotine when the Jacobins instituted The Terror. Arriving back in America, a journey expedited by then President Thomas Jefferson, he continued to write such tracts as "The Rights of Man", "The Age of Reason" and "Agrarian Justice" in which he proposed a democratic system of addressing poverty by taxing the rich to provide grants for young people and pensions for the elderly.

Paine, a Deist as were many of the Founding Fathers, was excoriated by 18th century churchmen because, unlike the others, he made very public pronouncements about it especially in "The Age of Reason". Emigrating from England, Paine in his writings encouraged the nascent American polity to make a true revolution, to become truly independent, and not just merely call for a redress of grievances from England. An ablolitionist, he failed, however, to address those views in "Common Sense". "Common Sense" gave dramatic new meaning and momentum to the American cause and called for a true democracy.

However, not everyone was thrilled with Paines's egalitarianism and democratic spirit. John Adams and other conservatives distrusted "the people", and since Paine's appeal was to workingmen and farmers, they distrusted handing over the reins of government to a democratic rabble. Paine never claimed any royalties for his writings which at first were published anonymously. Paine eventually petitioned Congress for some redress for his efforts and was awarded a farm in New York State. He continued to write and be involved in politics.

"Paine did more than censure Britain's political order. Reviving the plan he had begun to formulate years earlier but had set aside in his encounter with America, he extended his radical-democratic thinking by outlining a series of welfare programs that a revolutionary change in government would afford. Along with suggesting a progressive estate tax to limit accumulation of property, he recommended raising the incomes of the poor by remitting their taxes and augmenting the sums, distributing special relief for families with children, creating a system of social security for the elderly, instituting public funding of education through a voucher system, providing financial support for newly married couples and new mothers, and establishing employment centers for the jobless."

He also rendered a most appealing image of the good society:

"When it shall be said in any country of the world, "My poor are happy; neither ignorance nor distress is to be found among them; my jails are empty of prisoners, my streets of beggars; the aged are not in want, the taxes are not oppressive; the rational world is my friend, because I am a friend of happiness: when these things can be said, then may that country boast of its constitution and its government."

Even as Paine pushed radicalism in a social-democratic direction, he proclaimed, "I have been an advocate for commerce, because I am a friend to its effects." It may seem odd to many of us today, but like many eighteenth-century radicals confronting the legacy of absolutism, Paine comprehended "political liberty and economic liberty" as mutually interdependent and imagined that economic freedom served to assure equality of opportunity and results. Witnessing monarchical regimes taxing the productive classes, transferring wealth to parasitic royals and aristocrats, and punishing working people and the poor, he personally had come to view nondemocratic governments, not markets, as the fundamental cause of social inequality and oppression. Consequently, he proposed the liberation of the market and expansion of commercial activity.

Commerce was, for Paine, "a pacific system, operating to unite mankind by rendering nations, as well as individuals, useful to each other ... If commerce was permitted to act to the universal extent it is capable of, it would extirpate the system of war, and produce a revolution in the uncivilized state of government." As much as he appreciated the manifold potential of free markets, however, he did not hold that equality AND democracy must necessarily defer to the imperatives of commerce and trade. And as his revolutionary proposal for welfare-state policies attests, he increasingly realized that the democratic governments for which he fought would have to politically address inequality and poverty.

Paine came to see later that exploitation was not necessarily always at the hands of aristocratic governments, but was also carried out by the affluent to the detriment of the poor. He proposed a redistribution of income from the wealthy to the poor by means of taxes. He realized that the exploitation of labor led to the wealthy class on the one hand and the poor on the other. This is much the same pass as the US is coming to in the present age except for the fact that to a greater extent it is not the exploitation of labor so much as it is joblessness that is leading to the creation of an extended poverty class. Either wealth is redistributed from rich to poor or the economy comes to a grinding halt as jobs for the poor and middle class are being eliminated right and left and government cannot continue to borrow money to give to the jobless in order to prevent them from becoming destitute. Therefore, in order that the poor don't all become homeless serfs digging through garbage pails for their food, government has to play the role of distributing relief as well as paying for it and this is only possible by taxing those that have more money than any human could conceivably need in order not only to provide welfare but also to invest in infrastructure in order to create jobs.

Quoting from Kaye again:

"Back on his feet, Paine immediately set himself to writing a series of new pieces, including a highly original Agrarian Justice. He had come to see all the more clearly that inequality and poverty were the consequences not simply of exploitive systems of taxation and government expenditure but also of economic power and the payment of inadequate wages. 'Civilization,' he wrote, 'has operated two ways: to make one part of society more affluent, and the other more wretched, than would have been the lot of either in the natural state ... [T]he accumulation of personal property is, in many instances, the effect of paying too little for the labor that produced it; the consequence of which is that the working hand perishes in old age, and the employer abounds in affluence."

Paine refused to blame the poor for the economic circumstances to which they were reduced, for "poverty is a thing created by ... civilized life," which, he believed, did not exist "in the natural state." In the face of increasing disparities, he grew increasingly impatient: "The present state of civilization is as odious as it is unjust. It is absolutely the opposite of what it should be, and ... a revolution should be made in it." And even more strenulously than he had in Rights of Man, Paine propounded that society had an obligation to address material inequality and poverty through a system of public welfare. This "ought to be considered as one of the first objects of reformed legislation," he insisted, and its aim should be to "preserve the benefits of what is called civilized life, and to remedy at the same time the evil which it has produced."

Paine had been led to write Agrarian Justice by Bishop Richard Watsin's sermon "The Wisdom and Goodness of God, in having made both rich and poor," which Watson had included in his reply to The Age of Reason. "It is wrong to say God made both rich and poor," Paine responded. "He made only male and female; and He gave them the earth for their inheritance." Paine then held that since God had provided the land as a collective endowment for humanity, those who had come to possess the land as private property owed those who had been dispossessed of it - "on every principal of justice, of gratitude, and of civilization" - an annual ground rent. Specifically, he delineated a limited redistribution of income by way of a tax on landed wealth and property:

"To create a national fund, out of which there shall be paid to every person, when arrived at the age of twenty-one years, the sum of fifteen pounds sterling, as a compensation in part, for the loss of his or her natural inheritance, by the introduction of the system of landed property: And also, the sum of ten pounds per annum, during life, to every person now living, of the age of fifty years, and to all others as they shall arrive at that age."

Because of Paine's radical views regarding welfare and especially his radical Deist views regarding religion, he was discredited and reviled and demonized by the conservatives of his day. When he died the Quaker cemetery would not accept his body for burial so he was laid to rest on his New York State farm with only a couple people in attendance. There were no public dignitaries.

The French woman Madame Marguerite de Bonneville, who had accompanied him back to America with her sons and tended him through his illnesses and final days, would recall:

"Contemplating who it was, what man it was, that we were committing to an obscure grave on an open and disregarded bit of land, I could not help feeling most acutely. Before the earth was thrown down upon the coffin, I, placing myself at the east of the grave, said to my son, Benjamin, 'stand you there, at the other end, as a witness for grateful America.' Looking around me, and beholding the small group of spectators. I exclaimed as the earth was tumbled into the grave, 'Oh! Mr. Paine! My son stands here as testimony of the gratitude of America, and I, for France!' This was the funeral ceremony of this great politicain and philosopher!"

Thomas Paine had been expunged from the pantheon of the Founding Fathers because of his radical economic views and because of his publicly stated Deism. In later years his memory would be revived but he would never regain the status that he had during the Revolutionary War which was on a par with Washington, Jefferson anfd Franklin.

As Americans gather together this holiday season, many will take a moment to give thanks for the blessings in their lives. Most will be thankful for their family and friends. What will likely go unmentioned and unconsidered is an appreciation for the access to two basic necessities that many of us take for granted: access to water and adequate sanitation.

This is why it is important for all Americans to remember the 884 million people across the planet who went without access to clean water this year and the 2.5 billion who went without adequate sanitation. Without access to these basic building blocks of modern society, many of our brothers and sisters in undeveloped nations have also likely been left without the ability to pursue productive work because of health problems that hamper productivity and discourage economic investment.

As the 111th Congress draws to a close, members of the House and Senate have a time-sensitive opportunity to make good on that promise. Important legislation entitled the "Water for the World Act" (H.R. 2035, S. 624) has already passed the Senate and is close to making its way to the president's desk. This legislation, authored by my colleague Dick Durbin in the Senate and Earl Blumenauer in the House, would help the United States take a huge step forward in streamlining and focusing our foreign aid commitments when it comes to providing access to water.

The bill:• Establishes an Office of Water within USAID to implement country-specific water strategies;• Creates a Special Coordinator for International Water within the State Department to coordinate the diplomatic policy of the US with respect to global freshwater issues;• Establishes programs in countries of greatest need that invest in local capacity, education, and coordination with US efforts; and• Emphasizes cross-border and cross-discipline collaboration and the utilization of low-cost technologies, such as hand-washing stations and latrines.

If enacted, this bill could help 50 to 100 million people over the next six years. The bill would also provide a gift to the American people by spreading good will abroad and, thus, strengthening our national security through the exercise of soft power. Let's move this legislation across the finish line and provide millions of our fellow world citizens with the gift of water and, most importantly, a sense of hope for a better tomorrow.

Banks have scrambled America's system of private property ownership to the point that no one knows who owns what.

"For the first time in the nation's history, there is no longer an authoritative, public record of who owns land in each county." -- University of Utah law professor Christopher Peterson

There is an unbelievable scandal in the making that threatens to subvert our four-century-old method for guaranteeing a fundamental building block of the American republic—property ownership. The biggest reason why you probably haven’t heard much about it is that it involves one of the most generic and boring company names imaginable: Mortgage Electronic Registration Systems, Inc., or MERS. It is a story of deception engineered at the highest level of power for short-term gain, and another epic failure of the private sector to uphold the laws and traditions of American society, even something as fundamental as property rights.

Created in 1995 by the country's biggest banks, MERS quietly took control of and privatized mortgage record-keeping across the country and, in the span of a few years, scrambled America's private property ownership records to the point where no one could figure out who owns what. This was no accident, and was done by design: MERS was a tool used by America's top financial institutions to pump up the real estate market. Mortgage-backed securities, robo-signers, lightning quick foreclosures, subprime mortgages and just about everything else that went into feeding the biggest real estate bubble in U.S. history could not function without help from MERS. But unlike many of the Wall Street scandals, this one could blow up in the banks’ faces, with the little guy laughing all the way back to his free McMansion, and local governments seeing their empty coffers fill back up with the billions of dollars in unpaid fees that MERS circumvented.

The story begins in mid-'90s with the founding of MERS, Inc. by the nation's most powerful banks, ostensibly with the aim of streamlining and modernizing the process of registering and tracking mortgages. Traditionally, there has been no centralized registry of real estate ownership information, with counties maintaining their own records for properties within their borders—a system that has remained virtually unchanged since colonial times.

The MERS database went live in the middle of the dot-com bubble, and was supposed take inefficient government bureaucracies kicking and screaming into the future by providing a centralized, national registry of mortgage ownership information. "MERS addresses a problem that was costing the industry a significant amount of money," Rick Amatucci, a Fannie Mae vice president and the agency's liaison with MERS, told Mortgage Banking magazine, just as the new registry went online in 1997. The database would give lenders across the country instant access to real-time mortgage information, diminish potential for fraud, and lower costs for servicers and borrowers, according to Mortgage Banking Association, which was tasked with overseeing the project.

But that kind of talk was just for the press release. The banking industry wasn't concerned with efficiency or transparency or the greater good. It was all about making money, as quickly and cheaply as possible. And that is what MERS was for. It was created to help the industry push its latest money-maker: mortgage-backed securities, a Wall Street financial scam that dressed up the most toxic, guaranteed-to-fail loans as Grade A investment vehicles that could be sold to suckers looking for an easy gain.

But before mortgage-backed securities could be unleashed on the residential housing market on a massive scale, bankers needed to get rid of America's long-standing real estate recording laws, which required lenders to file all mortgage transactions—the origination of a new loan, for instance, or the transfer or sale of a mortgage between banks—with the county in which the property is located. While this recording requirement was not a problem in the sleepy pre-securitization days of the home loan business, when mortgage transactions were kept to a minimum, it was going to be much more difficult—if not impossible—with widespread use of securitization, which jacked up the industry like high-grade meth. Mortgages would be changing hands dozens of times, going from loan originators to banks to Wall Street investment houses, which would collect them by the thousands and package them into complex debt instruments that would be chopped up into shares and sold off to multiple investors all over the world.

Bankers needed a quick, clean way of reassigning mortgages without having to go through the "cumbersome" process of recording them with county courts and recorder offices. But instead of working with municipalities to modernize title registration by a creating a national database that was aboveboard and that everyone could use, the banking industry did what it does best: hid the information with sly accounting tricks.

And it succeeded. In just a few short years, MERS took over the bulk of residential mortgage registration. There are about 80 million residential mortgages in America today, and MERS tracks 60 percent of them.

One in six Americans gets sick from food every year, and about 3,000 die from those illnesses, according to data released Wednesday by the Centers for Disease Control and Prevention.

"These are preventable diseases," said Chris Braden, acting director of the division of food-borne, water-borne and environmental diseases at the CDC. "We need to do more to lower the impact of these diseases in the U.S."

The numbers mark the first time since 1999 that the federal government has updated the estimates for food-borne illnesses. The newest figures are lower than those in the 1999 report, which estimated that one in four Americans got sick from food each year and that 5,000 died.

But the new data cannot be compared with the earlier figures and should not be interpreted to mean food poisoning is decreasing, according to CDC officials.

Among the known food contaminants that can cause illness in humans, the leader is salmonella, which causes 28 percent of deaths from food-borne illness and 35 percent of hospitalizations, according to the report.

The report estimates that 48 million Americans get sick from food each year. Of that, 9.4 million become ill after consuming food contaminated by at least one of 31 known bacteria, parasites and other pathogens. But the remaining 38 million victims - the lion's share - are poisoned by unknown pathogens, according to the report.

Legislation designed to overhaul the nation's food safety system is pending on Capitol Hill.

Almost every piece of legislation passed in Washington these days is pushed forward in the name of creating jobs. Our elected officials are right to be concerned with the issue; Americans want stability and economic security in their lives.

But the predicament we face is hardly new. Over the past several decades, each "recovery" from recession has had fewer jobs attached to it, and those jobs that appear do not restore former standards of living to working people.

If we're going to change this, we must have public policy which demands accountability. That starts with how we hand out tax breaks. If businesses receiving tax cuts say they are going to create jobs, they should prove it.

Conservatives frequently contend that government is irresponsible and should run more like a business. But what sort of business undermines its base of revenue without demanding something concrete in return? You wouldn't go to a mechanic and agree to shell out hundreds of dollars even if the shop utterly fails to diagnose and fix your car. Yet tax cuts for the wealthy and tax loopholes for corporations are doing just that. They are handouts for the powerful given on blind faith.

The evidence that these handouts actually result in decent jobs for American workers is distressingly thin.

To understand the nature of unemployment in our country today, we must appreciate that a huge gulf has formed between traditional measures of business success and the actual well-being of working families. Traditionally, increased productivity was supposed to translate into increased wages for workers. But, as the Economic Policy Institute has documented, "from 2002 to 2007, productivity rose 11 percent but the hourly wage for high school and college educated workers fell." The only ones benefiting are those at the top. Timothy Noah recently reported in his well-regarded series on inequality at Slate that, "From 1980 to 2005, more than 80 percent of total increase in Americans' income went to the top 1 percent."

The last quarter has been a difficult one economically, right? That's certainly true for the 15 million Americans who are out of work and the record number of the jobless who have been looking for work for more than 6 months. But it's hardly the case for big business. In fact, in the third quarter of 2010, corporate profits hit a record high. As the New York Times reported, "Corporate profits have been doing extremely well for a while. Since their cyclical low in the fourth quarter of 2008, profits have grown for seven consecutive quarters, at some of the fastest rates in history."

Since the Clinton era, it has been popular even among Democrats to argue that investment in capital and spurring the economy through low tax rates would lead to job creation. But the evidence amassed since then does not support this idea. As Jack Rasmus recently noted, the period between 2001 and 2004, when George W. Bush pushed through a series of tax cuts for investors and corporations in the name of creating jobs, actually saw some of the weakest job creation rates on record following a recession.

We have to face the fact that the ties between corporate success and the economic health of the wider community have been completely severed. To re-link business growth and job creation policymakers must do three things:

First, if government is going to subsidize the private sector through tax breaks or loopholes, it must ensure that the investment brings public return, in the form of jobs. Individual businesses getting tax breaks in the name of job creation should be held accountable for demonstrating that their efforts are actually working. If they can't convincingly show that new jobs are being produced, the loopholes should be closed. Or better yet, the businesses should return the money they received.

Second, we must make sure the jobs being created are good ones, with living wages. The most effective way of doing this is to restore the ability of workers to collectively bargain with their employers. Historically, in times when workers have been able to exercise their right to form unions, the American middle class has grown alongside its businesses. The decline of organized labor in recent decades has been a main reason for the delinking of corporate profits and community well-being.

Third, when businesses are not creating enough jobs for American workers, we need to have a safety net for those left behind. Right now, those who are disconnected from employment are falling further and further down, and often the plunge can be fatal in terms of a worker's future prospects. Absent a net, it is almost impossible to get the long-term unemployed back into the job market.

If we're sincere about tackling the current crisis of unemployment and allowing working people to bounce back, we have to get serious about reconnecting productivity and wages. Current blind faith tax breaks are not doing that. Let's try some real accountability for job creation.